April 25, 2011
A Divergence of Opinion
As highlighted in Figure 1, estimates of GDP regarding 2011Q1 growth differ widely.
Figure 1: BEA estimates of GDP (blue bars), e-forecasting estimates of 25 April (red line), Macroeconomic Advisers estimates of 14 April (green line), and implied forecast for March (green triangle), all in bn.Ch.2005$ SAAR. NBER defined recession dates shaded gray. Source: BEA, 2011Q1 GDP 3rd release, e-forecasting.com, Macroeconomic Advisers, and NBER.
The implied q/q annualized growth rate from Macroeconomic Advisers' latest report is 1.4%, from e-forecasting is 4.3%. It's of interest to compare against survey averages. The WSJ's April survey mean growth rate is 2.7%.
Figure 2: BEA estimates of GDP (blue bars), and WSJ April 2011 mean forecast (red bar), all in bn.Ch.2005$ SAAR. NBER defined recession dates shaded gray. Source: BEA, 2011Q1 GDP 3rd release, and WSJ, and NBER.
The survey was collected April 1-6, so predates the arrival of a lot the negative data that impelled the shaving off of percentage points by Macroeconomic Advisers.
Figure Current-Quarter GDP Forecasts Consensus Panel Mean and Std. Deviation, from Macroeconomic Advisers, Weekly Commentary (week of 4/25/2011).
We'll have the first read on Thursday.
Posted by Menzie Chinn at April 25, 2011 06:16 PMdigg this | reddit
It seems to met that Macroeconomic advisors are more on the ball.
Posted by: don at April 25, 2011 07:33 PM
Would be nice if Keynesian stimulus worked in countries with destroyed balance sheet, then 4,3% would be possible. Unfortunately, it does not, and tricks used to stimulate economy cause expected pain from other quarters, and the result is as it is.
So they still think Q2 will be better? Why so? Inflation, oil prices will raise faster, or what?
Posted by: ivars at April 26, 2011 12:56 AM
Richmond FED reports lower expectations in April:
Posted by: Ivars at April 26, 2011 10:45 AM
GDP growth is nearly certain to come in below 2%, and odds are it will be below 1%. Consumer spending entered the year quite sluggish. This dominant component is the base or core of the GDP number. Net exports will then knock nearly 2 percentage points off the already atrophied overall. And that's the story in a nutshell. Growth will revive in the second quarter because the first quarter plunge of net exports is aberrational.
Posted by: JBH at April 26, 2011 05:43 PM
We are borrowing several trillion at the Federal level to get a total of $1.4 trillion in GDP improvement from the bottom of the recession. The economy was dependent upon expansion of debt for growth before the recession and we are trying to recreate a failed model by borrowing at the Federal level instead of at the consumer level. What we really need is deleveraging---less consumption and more savings. Fewer imports and more exports. There is no way out that does not involve pain and it is time to accept our medicine or commit our children to a much lower standard of living.
Posted by: Alex Sinclair at April 26, 2011 06:31 PM
Alex S.: "What we really need is deleveraging---less consumption and more savings. Fewer imports and more exports."
That's exactly what we need. Further leveraging from current levels may prove disastrous, yet Treasury is taking no effective action. This has left the problem for Ben and the Fed, but they can only try to push the dollar down vis-a-vis everyone, whereas the problem is Asian currency interventions. So, Ben is courting global disaster by trying to lever Chimerica up on the back of the euro area and a few others who play by the rules. This is a stupid, short-sighted policy.
Posted by: don at April 28, 2011 10:55 AM