The Outlook – The August Survey of Professional Forecasters

Growth prospects decelerate, while the CPI level looks higher, according to the August Survey of Professional Forecasters.

Figure 1: GDP as reported (bold black), forecasted GDP from WSJ July survey (red), forecasted GDP from May SPF (light blue), forecasted GDP from August SPF (dark blue), all in billions Ch.2012$, SAAR. Source: BEA, 2021Q2 advance release, WSJ July survey, Philadelphia Fed Survey of Professional Forecasters (various), NBER and author’s calculations.

The downshift in forecasted growth from May to August is quite substantial. While we don’t have a July SPF forecast, from my experience the SPF and WSJ forecasts for growth are similar. That in turn implies that the perceived growth outlook has dimmed over the past month. Retail sales

Interestingly, the current SPF consensus is closer to the Administration’s forecast locked down in February, than the CBO’s projection published in July. That means — if the CBO’s estimate of potential GDP is accurate.

As expected, CPI inflation is temporarily higher, so that the level is forecasted to be higher.

Figure 2: CPI (bold black), CPI projected by CBO (brown), forecasted by WSJ July survey (red triangle), forecasted by SPF (blue), 2016-19 stochastic trend (gray), all1982-84=100. NBER defined recession dates shaded gray. Source: WSJ July survey, Philadelphia Fed Survey of Professional Forecasters, NBER and author’s calculations.

The fact that the forecasted path of prices is roughly parallel to the CBO’s July projection indicates that the jump in inflation is perceived as transitory – the current quarter inflation forecast was raised from 2.6% to 5.2% annualized.

The downshifting of growth expectations is consistent with the fall in consumer sentiment, as measured by the University of Michigan’s survey.

Source: Ro, Axios, August 16, 2021.

The retail sales numbers today, below expectations, suggests an actual cooling of economic activity.

Figure 3: Real retail sales ex-food services, in 1982-84$ (green), and real consumption, in 2012$ (light blue), both in logs 2020M02=0. NBER recession dates shaded gray. Source: Census, BLS, BEA, NBER and author’s calculations.

Previous months’ data were upwardly revised, so IHS MarkIt nowcast for instance raised estimates of Q2 growth. GS hasn’t released (at least I haven’t seen it) updated nowcasts reflecting retail sales in Q3. For me, it’s of note that real (deflated by CPI) food service sales (calculated by substracting retail sales from retail sales and food services) is essentially flat over the last two months.


47 thoughts on “The Outlook – The August Survey of Professional Forecasters

  1. Moses Herzog

    Menzie, am I allowed a semi-personal question?? I always kinda assumed you either subscribed to GS, IHS Markit, J.P. Morgan forecasts or one of your old students let the cat out of the bag for you. You don’t have to tell us how you get it. Do you have relatively up to date access on this things, or do you “catch as catch can”—public news sources??? It’s actually neither here nor there, but the curiosity is killing me.

  2. Dr. Dysmalist

    Retail sales (in logs) are still well above the pre-pandemic peak, and my ocular regression indicates they’re significantly above where they would be if we had followed the pre-pandemic trend, so I don’t see anything alarming in the data.

    The slowing of growth that’s anticipated doesn’t look worrisome to me, yet, either. I sorta expected that the pace of growth would slow a little as people settle into a post-summer (regular work schedule, kids in school, etc) routine.

    I honestly don’t know whether to expect a Delta-variant slowdown or not. Locally, we just finished back-to-school shopping, and we’re beginning the back-to-college shopping fortnight, so it’s impossible to tell whether people will retrench somewhat. People around here seem to be ignoring the rising caseloads and hospitalizations. Very few are taking more precautions like masks, and I think they’ll simply try to brazen their way through Delta. It’s enough to make me hope that we will be allowed to get a vaccine booster, for added protection from these idiots.

    1. Moses Herzog

      @ Dr. Dysmalist
      I like this comment very much, I am trying to think of the correct words, some are escaping my mind at the moment, but your comment style here reminds me of Paul Krugman in some ways. That is you mention some technical mathematical things in the first part of your comment, but kind of “talk it out” in the latter half of your comment (as I said the word I want to use here escapes me). But I think “talking it out” kind give us deeper conclusions than we think sometimes, and can bring another light to things. So I like your comment here very much. If that makes any sense…..

      I imagine your math skills are a level better than mine, still it doesn’t mean that “talking thoughts out” can’t give you something maybe sometimes math can’t.

  3. Gregory Bott

    I would be careful about that base data. The revisions there are going to be terrible and much larger than average. Also looks like the “new” covid wave is over and cases are now beginning to fall.

    Retail sales are a auto sales distortion(the rest is just stimulus unwinding). One that will unravel greatly by the 4th quarter as production catches up to demand.

    1. Barkley Rosser


      Where did you get this idea new cases are declining? Today’s WaPo reports 182,950 new cases yesterday, a new daily high for this wave. Looks like you are jumping the gun on that one.

      That said, we have seen some other nations a bit ahead of the US on this, such as UK, rather suddenly see new cases stop rising and then start falling quite noticeably. But we do not seem to be quite at that point yet. Maybe it will arrive shortly, but then again, maybe not.

      1. Baffling

        Bots “new” cases falling comment simply reinforces my notion that he is a paid? shill promoting a certain viewpoint. That viewpoint is not based on reality, but political gain. Its meant to distract from the humanitarian disasters brought on by the republican governors in texas and florida.

      2. Moses Herzog

        Think maybe the death rate per case may be lowering, which might be slightly confusing to some people. It’s not hard to understand but it doesn’t take something terribly complex to confuse a MAGA person.

      3. rjs

        tangential, but i think this is important:

        A grim warning from Israel: Vaccination blunts, but does not defeat Delta | Science | AAAS
        Israel has among the world’s highest levels of vaccination for COVID-19, with 78% of those 12 and older fully vaccinated, the vast majority with the Pfizer vaccine. Yet the country is now logging one of the world’s highest infection rates, with nearly 650 new cases daily per million people. More than half are in fully vaccinated people, underscoring the extraordinary transmissibility of the Delta variant and stoking concerns that the benefits of vaccination ebb over time.

        UK cases are inching up again, and they’re not exactly a success story, with a per capita rate similar to the US, where we now account for 21% of all new cases worldwide…so three of the most vaccinated countries are leading the global surge…

        1. pgl

          Efficacy has two measures. You are noting the fall in efficacy with respect to avoid getting the virus in the 1st place. But the real reason to take the vaccines is to not have a deadly outcome if one gets the virus. The good news is that efficacy in this 2nd sense is still quite high for the Pfizer and Moderna vaccines.

      4. Ulenspiegel

        “such as UK, rather suddenly see new cases stop rising and then start falling quite noticeably.”

        But the cases have been increasing again for three weeks now in UK.

    1. pgl

      The Senior Citizens League may be nice people but this is your go to group for forecasting inflation? Have your new buddies check you out for dementia.

        1. pgl

          I was not questioning their ability to forecast. But I did suggest that having nominal benefits merely keep pace with inflation is far from a pay increase. Yea – the title of your little link here was really stupid.

    2. pgl

      Linking to CNBC is always a bad idea. First sentence claims retirees will see their benefits rise. WTF? COLA does not increase real benefits. All it does is to make sure nominal benefits keep pace with the increase in consumer prices.

      JohnH is a true expert in finding the dumbest discussions ever!

    3. pgl

      ““With one third of the data needed to calculate the COLA already in, it increasingly appears that the COLA for 2022 will be the highest paid since 1983 when it was 7.4%,” said Mary Johnson, Social Security policy analyst at The Senior Citizens League.”

      Yes – Ronald Reagan was such a progressive. Oh wait that 7.3% increase barely kept pace with inflation back then.

      You know – it would be nice if JohnH actually read the incredibly dumb thinks he endorses.

  4. Baffling

    And in other news, texas lead hypocrite governor abbott just tested positive for covid. Now that is not surprising, since he is pushing policies that prohibit schools from masking or vaccinating. Thus sending the youth of the state to slaughter. But the bastard is deliberately exposing the state to the virus, and is taking monoclonal antibodies to defeat the virus. And apparently has already had a third booster shot. Too bad the rest of the state doesnt have access to those life saving treatments while he intentionally spreads the virus throughout the state. What a sad excuse for a human being.

    1. pgl

      “taking monoclonal antibodies to defeat the virus. And apparently has already had a third booster shot.”

      Abbott like Trump is getting the best treatment money and raw political power can buy.

      1. baffling

        but he is sending in students unmasked and unvaccinated. conservatives certainly are not looking out for the health of our youth. abbots policy is to inflict as much damage on the youth as he possibly can impart, just so he can hear the maga cheers in the background. what a lousy human being.

        1. pgl

          Abbott and that clown that calls himself Florida’s governor should be tried and executed. And this is from someone how has always been opposed to the death penalty.

  5. ltr

    August 16, 2021

    The Bad Economics of Fossil Fuel Defenders
    By Paul Krugman

    Global warming is fake news. Anyway, it isn’t man-made. And doing anything about it would destroy the economy.

    Opponents of action against climate change have always relied on multiple lines of defense: If one argument for doing nothing becomes unsustainable, they just retreat to another.

    That’s what we’re seeing now, as conservatives argue against the Biden administration’s push for climate-friendly public investment. As it happens, this push is taking place against a background of unprecedented heat waves, huge forest fires, severe drought in some places and catastrophic flooding in others — phenomena that scientists have long warned would become more common as the planet gets hotter.

    Given these events, as The New York Times recently reported, * Republicans have toned down their climate denial — in some cases pretending that they never denied the science in the first place. Thus Senator James Inhofe, author of 2012’s “The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future,” is now claiming that he never called climate change a hoax.

    If past experience is any guide, this new willingness to accept the reality of global warming won’t last; the next time America has a cold snap, the usual suspects will go right back to denying climate change and attacking scientists. For now, however, they’re focused on the immense economic damage that, they claim, will result if we try to limit emissions of greenhouse gases.

    So let me offer four reasons not to believe a word they say on this subject….


    1. ltr

      August 17, 2021

      Who created the renewable-energy miracle?
      By Paul Krugman

      As terrible as many things in the world are, climate is unique in posing an existential threat to civilization. And it’s horrifying that so many political figures are dead set against any serious action to address that threat.

      Despite that, there’s still a chance that we’ll do enough to avoid catastrophe — not because we’ve grown wiser but because we’ve been lucky. We used to believe that achieving big reductions in greenhouse gas emissions would be difficult and expensive, although not nearly as costly as anti-environmentalists claimed. Over the past dozen years or so, however, we’ve experienced a technological miracle. As nicely documented in an article * by Max Roser, the costs of solar and wind power, once dismissed as foolish hippie fantasies, have plunged to the point that quite modest incentives could lead to a rapid reduction in use of fossil fuels:

      Here comes the sun.

      But was it really luck? Did this miracle — actually two miracles, since generating electricity from the sun and from the wind involve completely different technologies — just happen to arrive in our moment of need? Or was it a consequence of good policy decisions?

      The answer is that there’s a pretty good case that policy — the Obama administration’s investments in green energy and European subsidies, especially for offshore wind — played a central role.

      What’s the justification for that conclusion? Start with the fact that neither wind nor solar power was a fundamentally new technology. Windmills have been in widespread use at least since the 11th century. Photovoltaic solar power was developed in the 1950s. And as far as I can tell, there haven’t been any major scientific breakthroughs behind the recent dramatic decline in both technologies’ costs.

      What we’re looking at, instead, appears to be a situation in which growing use of renewable energy is itself driving cost reductions….

    2. pgl

      ‘Thus Senator James Inhofe, author of 2012’s “The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future,” is now claiming that he never called climate change a hoax.’

      Straight from the JohnH play book. Of course our Usual Suspects remain busy calling climate change a hoax.

      1. Barkley Rosser

        Inhofe’s most notorious moment as a climate change hoaxer came some years ago when there was a big snowstorm in Washington and he walked into the Senate with a large snowball and declared, “See, global warming is over,” although I suspect that now he might claim that he was just joking back then.

  6. ltr

    August 18, 2021

    Over 1.88 bln doses of COVID-19 vaccines administered in China

    BEIJING — A total of over 1.88 billion doses of COVID-19 vaccines had been administered in China as of Tuesday, data from the National Health Commission showed Wednesday.

    [ Chinese coronavirus vaccine yearly production capacity is more than 5 billion doses. Along with over 1.887 billion doses of Chinese vaccines administered domestically, another 800 million doses have been distributed internationally. A number of countries are now producing Chinese vaccines from delivered raw materials. ]

  7. ltr

    August 18, 2021

    Chinese mainland reports 28 new COVID-19 cases

    The Chinese mainland recorded 28 new confirmed COVID-19 cases on Tuesday, with 6 being local transmissions and 22 from overseas, the latest data from the National Health Commission showed on Wednesday.

    In addition, 17 new asymptomatic cases were recorded, while 500 asymptomatic patients remain under medical observation.

    This brings the number of confirmed COVID-19 cases on the Chinese mainland to 94,500 with the death toll unchanged at 4,636.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    1. pgl

      Oh good grief. Chicken Little is promoting himself with doomsday gibberish. I guess he misses his invites to Fox and Friends.

    2. Barkley Rosser


      To what are you referring here? China? US? pandemic? growth? financial markets” inflation?

        1. Barkley Rosser

          Maybe it is predicting that one of the various people here who have made factually inaccurate statements will be issuing a correction of their own mistakes, lol!

  8. macroduck

    Fun little article on various factors leading to a rise in the retail (Amazon) price of a plush giraffe toy:

    The author took as given that a 54% rise in the cost of production, delivery and sale justifies a 46% rise in profit, but never mind. A look at various costs is enlightening.

    Shipping plus FedEx accounts for 38% of the rise in the retail price.

    Production costs added 7%, mostly due to a decline in the value of the dollar vs the yuan.

    Pro-rated price increases — sales tax and Amazon’s fee — account for 21% of the price increase.

    Profit accounts for 34% of the increase in retail price, but that is apparently just the profit to the producer of the giraffe. If one counts Amazon’s increase as profit, then increased profit accounts for about 48% of the price increase.

    There is some rounding going on here, but that’s 100%. The author doesn’t provide a dollar figure for labor costs, and apparently only counts labor in the production of the giraffe, so we don’t get a number for labor’s share in the $29 dollar increase in the price of giraffes, but the impression given is that it is less than 1%.

    So much for the fearsome wage/price spiral.

    Now, Johnny is going to jump in here and claim that I’m making his case, but that would not be true. The labor cost in question is for Chinese rather than U.S. labor. Giraffe costs (as presented by a journalist who doesn’t account for costs the way accountants or economists would) don’t provide a basis for any claim Johnny mght make, no matter how he may twist and turn in making such a claim.

    The story, based on what the author provides, is that transportation bottlenecks drive increased profit (I don’t write the jokes, I just tell ’em) and increase pro-rata charges and that nothing else much matters. It’s down to scarce transport.

    1. pgl

      J.W. Mason, an economics professor at John Jay College and Jani the Giraffe! That is a fun story. But Chinese labor put Jani together? Wait for it – Johnny is about to go off about how the world came to end because we decided to trade with China.

    2. pgl

      “Viahart paid about $13.27 per stuffed animal for shipping, up from $3.01 before the pandemic.”

      Barkley keeps telling us shipping costs have risen but DAMN. 3% of the price is already a bit high but 13% is extreme.

      A few years ago for the day job I did some research on the shipping sector which was incurring losses as capacity had surged such that these companies had too many ships and were reducing their fees big time. I figured the market would slowly reverse this trend but then I had no idea what 2020 would bring.

      BTW there is still a lot of shipping capacity so maybe parents can buy Jani for the kids at more reasonable prices by Christmas.

      1. Barkley Rosser

        The shipping cost situation is one part of the supply side problems the world economy is facing that is not yet getting any better, especially with the recent announcement out of China of a major port shutting down due to the delta variant outbreak. Chip shortage is also apparently worsening.

      2. Dr. Dysmalist

        “maybe parents can buy Jani for the kids at more reasonable prices by Christmas.”

        I doubt that. Retailers want Christmas items on display before Thanksgiving, i.e. Black Friday. That means not only having the goods in hand but having time for workers to plan layouts and physically stock the items. That means shipments arriving in stores starting in October, with some items (artificial trees, decorations, wrappings, etc.) arriving around October 1st, and other merchandise starting to arrive in-store starting in mid-October. Figure needing to be in warehouses at least a week earlier, roughly, that means hitting our shores and being loaded onto trains and trucks maybe at least a week before that, we’re at September 15th-October 1st.

        A slow boat from China takes what, 2 weeks to a month? That means setting sail around or even before our Labor Day, so U.S. Christmas gifts are being completed and shipping from Chinese factories around now, if not earlier. Sales contracts have already been agreed and let, else production wouldn’t be occurring (or have already occurred).

        Which is a long-winded way of saying that I expect that the prices being reported now are close to the prices we’ll see on Black Friday. Cost reductions occurring in a month or later will likely be too late to affect U.S. prices for this calendar year.

    3. pgl

      One other thing that jumps off the page with respect to Jani. Cost of producing the giraffe is a mere 25% of selling price. Gross margins near 75% is either a sign of way too much in the way of marketing costs or obscene profits. Yea we see this with pharmaceutical products as well as certain high priced fragrances. But a kid’s toy? DAMN!

    1. Barkley Rosser


      Tucker Carlson will approve: tax cuts for authoritarians saving civilization, families, and “democracy”!!!

      1. pgl

        Speaking of Tucker – he is now very afraid that those Afghans who supported us will be moving to America. After all – his lily white neighborhood is very afraid of BROWN people especially if they are Muslims.

        1. Dr. Dysmalist

          Of course Cucker Tarlson’s lily-white rich people’s enclave is afraid of immigrants, especially those more richly endowed with melanin. I remember reading, at least 2 years ago (likely more, but during the Orange Foolius Maladministration), that the Americans most afraid of immigrants (and therefore most opposed to immigration) were the people who lived in the places least affected by immigration. It’s not familiarity but the lack of it that breeds contempt.

          I wish I could remember where I read that. I can’t even find it right now but I’m (pretty) sure I didn’t dream it up.

  9. ltr

    August 18, 2021

    Workers, in Demand, Have a New Demand of Their Own: A Career Path
    More low-wage employees want opportunities to grow. Big companies are making more promises to help them.
    By Steve Lohr

    Mark Wray was working at the concession stand of a movie theater when the pandemic lockdowns hit last year. The movie theater shut down, and he lost his job.

    But instead of looking for another low-wage job, Mr. Wray sought a different path. He found a program teaching basic technology and business skills, completed it and landed a job at a fast-growing online mortgage lender. He started in March, working in customer service and tech support. He makes about $55,000 a year, compared with $17,000 at the movie theater.

    “The pandemic, weirdly, was an opportunity,” said Mr. Wray, 25, who is a high school graduate and lives in Charlotte, N.C. “And this job is a huge steppingstone for me.”

    People returning to the work force after the pandemic are expecting more from their employers, pushing companies to raise pay, give bonuses and improve health care and tuition plans. Paychecks are getting bigger. Wages rose strongly in July, up 4 percent from a year earlier, according to the Labor Department. For workers in leisure and hospitality businesses, pay increased nearly 10 percent.

    Yet many workers are also seeking something else: a career path, not a dead-end job….

Comments are closed.