Economists Forecasting Q4 GDP
Doug Short | Jan 29, 2015 12:17AM ET
The big economic number this week will be the Q4 Advance Estimate for GDP on Friday at 8:30 AM EST. For some perspective on quarterly GDP so far this year, Q1 was negative at -2.1%, followed by a strong rebound to 4.6% in Q2 and a drift higher in Q3 to 5.0%. The standard explanation for the Q1 contraction is the economic impact of an unseasonably cold winter.
What do economists see in their collective crystal ball for Q4 of 2014? Let's take a look at the GDP forecasts from the latest Wall Street Journal survey of economists conducted earlier this month.
Here's a snapshot of the full array of WSJ opinions about Q4 GDP. I've highlighted the values for the median (middle), mean (average) and mode (most frequent). In the latest forecast, the median and mean were an identical to one decimal place at 3.0%. The mode (seven of 65 forecasts) was a tad higher at 3.2%, and the second most frequent value was a higher 3.4%.
As the visualization above illustrates, despite the matchup of the median and mean, the latest WSJ survey had it outliers, ranging from a grimly pessimistic 1.4% to a trio at 4.0% and an even more optimistic forecast of 4.2%.
Investing.com aligns with the median & mean WSJ economists with its 3.0% forecast. The Briefing.com consensus goes with the WSJ mode at 3.2%, but its own estimate is for a higher 3.4%.
h3 GDP in 2015/h3Friday's release of the Advance Estimate for Q4 GDP is, of course, a rear-view mirror look at the economy. The WSJ survey also asks the participants to forecast GDP for the four quarters of 2015. Here is a table documenting the median, mean and extremes for those forecasts.
Interestingly enough (or should I say "boringly enough"), the median to one decimal place is unchanged at 3.0% for the next four quarters, and the mean oscillates by a fractional 0.1%.
h3 GDP: A Long-Term Historical Context/h3For a broad historical context for the latest forecasts, here a snapshot of GDP since Uncle Sam began tracking the data quarterly in 1947. The Q3 WSJ median and mean forecasts are above the 1.6% 10-year moving average and just a tad below the 3.3% Quarterly GDP average since its inception in 1947.
Get The News You Want
here ). Consider: the three quarters of 2014 GDP using the BEA's preferred method are -2.1%, 4.6% and 5.0%. The year-over-year change in the three quarters is a much less attention-grabbing 1.9%, 2.6% and 2.7%. When we use the more intuitive percent change from a year ago, we get a somewhat disturbing long-term perspective on where we are in the grand scheme of things, one the more closely resembles the moving average in the chart above.
On Friday we'll find out how the Q4 forecasts stack up against the Advance Estimate of the real thing.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.