Estimates of monthly GDP indicate a rebound. So too do forecasts.
Figure 1 depicts GDP as reported in the BEA’s 2014Q1 advance release, the mean forecast from the WSJ May survey, and two monthly real time series.
Figure 1: GDP as released by BEA (light blue bars), WSJ May mean forecast (black), Macroeconomic Advisers monthly GDP (red), and eforecasting monthly GDP (green), all in billions Ch.2009$, SAAR. Forecasts assume 2014Q1 GDP growth is -0.7 ppts, SAAR. NBER defined recession dates shaded gray. Source: BEA 2014Q1 advance release, WSJ, Macroeconomic Advisers (May 14), eforecasting (May 13), NBER, and author’s calculations.
Note that eforecasting’s index for April is in line with the WSJ mean forecast for 2014Q2. Here is a more detailed look at the WSJ forecast, placed in the context of potential GDP.
Figure 2: Log GDP (blue), WSJ May mean forecast (red) and 20% trimmed high and low forecasts (gray), and potential GDP (black). Forecasts assume 2014Q1 GDP growth is -0.7 ppts, SAAR. NBER defined recession dates shaded gray. Source: BEA 2014Q1 advance release, WSJ, CBO Budget and Economic Outlook (February 2014), NBER, and author’s calculations.
Note that the mean forecast indicates a -3.2 percent output gap as of 2015Q2; even with the trimmed high forecast, the gap would be -2.7 percent (both in log terms). This suggests that we are nowhere near a rapid surge in inflationary pressures.