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Sunday, July 12, 2009

Selected GDP Forecasts

by Calculated Risk on 7/12/2009 01:59:00 PM

Professor Roubini thinks the economy will be in recession through the end of 2009, and that the recovery will be "shallow". More from Christian Menegatti at RGE Monitor:

The general consensus is that this recession will end sometime in the second half of 2009. While RGE Monitor expects more quarters of negative real GDP growth in 2009, we also expect the pace of contraction of economic activity to slow significantly. We forecast negative real GDP growth in Q2 2009 and Q3 2009, and for real GDP to remain flat in Q4. After the sharp contraction in economic activity in 2009, growth will reenter positive territory only in 2010, and then at a very sluggish rate, well below potential.
Paul Kasriel at Northern Trust is a little more optimistic: When We Get “There”, Will We Know It?
Back in April, our forecast update commentary was entitled, “Are We There Yet?” The “there” referred to a resumption of real growth in the overall economy. Our answer in April was “no,” which also happens to be our answer in July. When will we get there? Our answer in April was the fourth quarter of this year, which also happens to be our answer now. Assuming we get there in the fourth quarter, would most households and businesses in America know it if they were not so informed by the media? Probably not. We anticipate another “jobless recovery,” which implies a relatively feeble one. We would not be surprised to hear terms early in 2010 such as “double dip.”
I think Kasriel might be a little too optimistic about 2010.

Jan Hatzius at Goldman Sachs sees a little positive GDP growth starting in Q3, and a sluggish recovery (no link).

Here are the quarter by quarter real GDP (annualized) forecasts from Northern Trust and Goldman:

QuarterNorthern TrustGoldman Sachs
Q2 2009-2.2%-1.0%
Q3 2009-2.1%1.0%
Q4 20092.3%1.0%
Q1 20101.2%1.5%
Q2 20102.4%1.5%
Q3 20102.4%2.0%
Q4 20103.3%2.0%

I think the real GDP growth will turn slightly positive sometime in the 2nd half of this year, but my guess is 2010 will be barely positive, with the unemployment rate rising for most of 2010.