The IGM/Fivethirtyeight Round 7 survey is out, with discussion here. The poll results are here. Below are some forecasts and nowcasts to consider.
Figure 1: GDP as reported (black), IGM/Fivethirty Covid-19 panel median (teal), Survey of Professional Forecasters mean (blue), and Atlanta Fed GDPNow of 18 August (red). Source: BEA 2020Q2 advance, IGM/Fivethirtyeight round 7, Survey of Professional Forecasters August survey, Atlanta Fed GDPNow of August 18, and author’s cacluations.
Note that the IGM/Fivethirtyeight forecast is not strictly comparable to the SPF because it relies on median growth rates rather than mean growth rates. For 2020Q3, this is probably not a big deal as the distribution looks (as far as I can tell) pretty unskewed. However, the 2020Q4 distribution looks like there are some really high forecasts (90th percentile is 10%, 10th percentile is 4%, median is 5%, SAAR). Hence, the median and mean probably differ more.
Compared to the last round of forecasts (discussed here), the IGM/Fivethirtyeight panel has become slightly more optimistic. However, overall, they remain more pessimistic than the Survey of Professional Forecasters. The Atlanta Fed nowcast (GDPNow) as of August 18 is more optimistic, while the NY Fed’s nowcast (not shown) pretty much forecasts the same level of GDP for Q3 as the IGM/Fivethirtyeight’s.
The survey respondents also predict a long slog ahead for recovery even if a vaccine is developed, as described in the Fivethirtyeight article:
…even the consensus predictions for the rosiest scenario — which could, in reality, take months or years to emerge — weren’t actually that optimistic. In that fantasy world where 75 percent of Americans wake up tomorrow and are certifiably immune to the coronavirus, the economists thought there was only a 15 percent chance that GDP would return to its pre-pandemic level by the end of 2020, and only a 35 percent chance that GDP would hit that mark by the end of the first quarter of 2021.
Looking farther ahead, the panel has a modal prediction of output recovering to 2019Q4 levels in 2022H2, which matches the modal response in the National Association of Business Economics (NABE) survey, discussed in this Axios article.
I am not endorsing or predicting a “K”, just thought it’s a well written article and fit well in this thread.
https://ftalphaville.ft.com/2020/08/19/1597841608000/Yet-another–K-shaped–recovery-data-point/
K looks like it is happening. Of course, that is about distribution, while the post Menzie has put up is about aggregate outcomes.
@ Barkley Junior
Still butt hurt over your multiple false statements in the Howlers thread?? It relates to different ways recessions are described, which of course relates to aggregate outcomes. Do you ever stop to think that if you didn’t try so desperately to correct others when there is really nothing you have to contribute is what in fact makes you look like a supreme jackass 85% of the time??
Moses, only one false statement on the Howlers thread, my failure to spot he mentioned “unit roots,” regarding which I have admitted I was wrong and apologized. Nothing I said about his analysis beyond that was wrong, and if you look closely you will find he does not claim that, only claiming I am noting that what showed does not remotely critique anything Menzie has daid or done. Do you wish to claim he is right ans that it does? If you wish to claim that, do you wish to get specific about just exactly what in his analysis provides a critique of exactly what in Menzie’s analysis?
No, you will not be able to do that, because there is nothing, as I pointed out.
I also note that while I admitted I made a mistake and apologized, he has now resorted to out and out lying, claiming he did not say something he most definitely did: “The regression is spurious.” Are you going to defend Trumpish lying by Rick Stryker just because he managed to catch me making a mistake?
BTW, you happen to be wrong about the K pattern “related to aggregate outcomes,” It does not, making you almost as out of it as Rick Stryker. It is certainly true that if one draws a K, very carefully delinieating the precise lengths and slopes of the two arms, one might be able to impute an aggregate outcome. But that it is not what it is for or shows. What it shows, I do think you know this, Moses, is that upper income people are doing well, possibly even better with parts of the stock market hitting new record highs, while lower income people are doing much worse, bearing the ovrwhelming brunt of the ongong unemployment and other problems. That is what the K is about, not about aggregage performance.
You really actually do not understand this, or have you decided to take Trumpish lying inspired by Rick Stryker?
Oh, and Moses, I cannot be “butthurt.” You are the one who has revealed to one and all here that I wear leather pants, and I assure you that they protect one from being “butthurt.” Not only that, but with my wearing Hawaiian shirts I show my allegiance to white nationalism, which you had already revealed given that I teach at a place named for a slaveowner and have Confederate officer relatives. But, hey, all that makes me even more immune to being “butthurt,” along with those handy dandy leather pants, :-).
And, just in case anybody missed it down at the end of the Howlers thread, here is Rick Stryker outright lying and doubling down on it rather than admitting it. He claims he did not say “The regression is spurious.” But on Aug. 22 at 11:05 AM on that thread he wrote the following, supposedly the key to showing that Menzie was mistaken in his econometric analsysis, and that it is not Howler #9 for Rick to claim he has successfully critiqured Menzie’s analysis:
“The regression is spurious as there is no basis to decide between the levels or logs and no reason to examine heteroskedasticity.”
I described that sentence as “blubbering gibberhs,” and it certainly contains the phrase Rick is now Trumpishly claiming he never wrote.
So, Moses, do you wish to join with the dark side and argue that I was wrong to accuse Rick of lying and also that I failed to understand how he had devastatingly destroyed Menzie’s analysis with this outstanding piece of econometric wisdom?
Junior, as always, highly entertaining. Please don’t lose steam now, I can tell you’re “just getting warmed up”. You and Kudlow discussing a V recovery in 2020 are some of the best laughs I’ve had since the old John Kerry stories over at The Onion.
https://www.theonion.com/tag/john-kerry
We know Kudlow is a washed up cocaine addict, but what got you to this point?? Lay off the pork products at breakfast time ok??—the cholesterol is stifling the blood flow to your brain. In my early days in China I used to eat a sweet tasting porridge for breakfast that I remember had kind of a purple color. You try this regular for breakfast now ok?? That’s gonna help the blood flow in your brain better than all that sausage and bacon. That purple porridge is gonna help the sensory neurons in your brain that got disjointed due to misuse.
https://dailycookingquest.com/azuki-and-sticky-rice-porridge.html
Hang tough!!! Junior, get away from the pork and there’s a tiger inside you, I believe that!!!!
https://www.youtube.com/watch?v=Orjbwv8H9zM
So, Moses, if it is not the V-that-flattens that I called it to be, what is it? You never say, nor do you note that a rather large number of people here say I was right, but I shall not list them as that might just call forth abuse of them by you. We know that you are not saying it is an L, that supposedly having been some unidentified previous recession.
Or do you think that the answer is “K”? It is frankly hilarious that this thread got going when I agreed with you that this does look like a K, but noted the trivially true fact that it is about distribution of income, that the current recovery is going overwhelming to high income people while lower income people are suffering, and is not about the aggregate outcome. But somehow this trivially true observation set you off on denouncing me on various grounds, and now you are back to acting like my call that the aggregate pattern would be a V-that-flattens to be something ridiculous. You sound like some Trumpist dismissing the Senate Intelligence Report and the Mueller Report as simply promulgating “the Russia Hoax.” Sorry, Moses, name anybody here who thinks that what we have seen has been a short tern “V hoax.”
Go ahead. Name them. You might think Rick Stryker might, but I suspect he is part of the Kudlow “V-all-the-way-to-November,” so not all that keen on my V-that-flattens. And, yet again, if the short term bounceback was not a V, what was it, Moses, what was it?
BTW, it occurs to me that yo may not get it that K is not an aggregatre measure, Moses. It is not K versus V. They can happen simultaneously, and clearly did during the period we were having the V, which has since flattened out, as I forecast many times. K described how the rich were doing well while the poor were not, while the V described the aggegate situation, given the K is not an aggregate measure.
Got it now, Moses?
https://twitter.com/BetteMidler/status/1298086078663086084
Uuuuuuuuhh, Yes.
I imagine we’ll be seeing more stories like this in the near future with Mitch Frog McConnell and Senate Republicans refusing to pass unemployment benefits etc???
https://www.propublica.org/article/she-was-sued-over-rent-she-didnt-owe-it-took-seven-court-dates-to-prove-she-was-right
It is a V that got punched and has a droopy fat lip. Which is a pretty good description of the whole country’s mood as far as I can tell.
I know this is boring, but since Moses claims I am wron g”85% of the time” and has continued to appear to claim that I have never had it right about US GDP performance, I remind everybody here that I was the first person here to call that the US GDP was doing a V-shaped recovery, aside from the Trumpisti who insisted (and continue to insist, at least Kudlow did so on TV last; night) that it was going to be a V all the way to November.
But then I shortly thereafter, still back in June, again before anybody else here I think, said that the V was going to flatten out. The figures above. Quite a few people here have actually agreed that I was the first out the door here with what indeed looks to have happened, a V that has since flattened, or “gotten a bloody lip” as I think Willie put it another thread.
Do you really wish to challenge this, Moses, and continue to insist somehow that I got it wrong on the behavior of the aggregate GDP path? Do you really want to get into a competition with Rick Stryker in lying and making false claims?
Ah, of course, Willie said it right here in the comment I commented on.
To Moses, since you brought up forecasting aggregate outcomes, I note that Menzie caught you apparently forecasting an “L” shaped outcome. After he did that you denied it and said that your comment was about other times. Now indeed John Cochrane has described what happened during the Obama presidency as such an L-shaped pattern, but it was not, and there never has been such a pattern in US history. But despite falling flat on your face with that one, and not providing any alternative, you have somehow felt it reasonable to repeatedly criticize me with strong language for my V-that-will-flatten forecast, even appearing to do so after misstating that I made “multiple” misstatements on the Howler thread. Do you understand how silly you look with all this, given that in fact it is pretty much universally accepted here that i was in fact right about my forecast?
If you want, maybe I can lend you my leather pants so you will not get too butthurt. But I insist on keeping my Hawaiian shirt so I can go out and shoot protesters if any get near me., :-).
Let’s review the record once again, since Barkley Junior insists.
All of these quotes are from Barkley Junior, except for the final one by commenter “AS”, who I would rank as probably one of the top 2 commenters (NO I do not include myself in the Top 2) of this blog. They include the links, so anyone can verify, or check the context.
“But now it is clear this projection is too conservative. If instead we assume that the increase in June is twice what was forecast, the moves it up by 1,000 to 18,000;. That remains a net negative for the second quarter, but now of only 300. That comes to a measly quarterly decline of -1.6%.
I do not know what that becomes annualized, but it is certainly not as negattive [sic] as a -20% annualized rate.”
https://econbrowser.com/archives/2020/07/continued-recovery-in-june#comment-237996
“ ’Possibility’ it might be as high as -20% for second quarter? It now looks like consumption is highly likely to be positive for the second quarter kills any chance of overall GDP growth for the second quarter being -20% or lower. Heck, I would be very surprised if it is lower than-10%.”
https://econbrowser.com/archives/2020/06/gdp-nowcasts-june-26th#comment-237778
“As it is, yes, Frankel is indeed on the list of ‘authorities’ I am challenging regarding these projections of a massive GDP decline in second quarter.”
https://econbrowser.com/archives/2020/06/gdp-nowcasts-june-26th#comment-237929
“I do not know whether US GDP growth for second quarter will be positive or negative, but as of now it looks to be a close call,”
https://econbrowser.com/archives/2020/06/imf-world-economic-outlook-june-update-forecast#comment-237773
Barkley Rosser June 19th
“So it is highly likely that global GDP will exhibit positive GDP growth for the second quarter of 2020.”
https://econbrowser.com/archives/2020/06/guest-contribution-defining-recessions-when-negative-growth-is-too-common-or-too-rare#comment-237553
From commenter “AS” June 26th:
“Hi Moses,
As I recall, Barkley was the first and perhaps the only economist to say that we may have a positive 2020Q2 GDP, so I was trying to give credit to his comments which are far different from what the average of the forecasts by the various NowCasts.”
https://econbrowser.com/archives/2020/06/imf-world-economic-outlook-june-update-forecast#comment-237756
Folks….. two things. you might ask at this point. Question 1: Did Barkley Junior, after 3 decades working as a “mathematical economist” at a semi-respected but ill-named University “not know” that the number quoted by IHS, and the different Fed regions and quoted by Jeffrey Frankel, all of them un-camouflaged estimates of the BEA number itself, as apposed to, say, whatever number Larry Kudlow had made up, or some “Rt/R-naught” number the great epidemiologist Ron Vara had pulled out of his head…… did not know that BEA number was an SAAR tabulated number???
And Question 2: Why a PhD who can manage to use his keyboard for many things, can never provide links to anything??~~~(thereby giving him the excuse of not being able to link back to his own continually badly sourced data, while also misattributing quotes, and falsely quoting peoples’ argumentative stances, and having the excuse that “I can’t do links” when he repeatedly misstates the opposing person’s argument in a way that flatters his argument.
Nevermind Junior moving the football goal posts of Barkley’s own arguments….
The initial 2nd Quarter GDP quoted by BEA in late July (the number Barkley was shooting for and miserably failed at getting, compared to the Fed Res forecasters and professional forecaster he was using this blog to criticize) was negative 32.9%. My prediction (a good 2+ weeks before the number came out) was negative 28.88%. I can post the original link if anyone wants to see. What what Barkley’s prediction?? Well, it depends what thread you go to, one of Barkley Junior’s 400 predictions you can read in one of the above links “Heck, I would be very surprised if it is lower than -10%”
This pretender and revisionist of his own statements Barkley Junior, apparently after failing royally to predict the BEA GDP number, then, after calling himself a “mathematical economist” for decades, told us all he had no idea the BEA’s headline quarterly GDP number was SAAR. Draw your own conclusions.
Everybody is now bored to pieces by this recounting that you are obsessed with, Moses, although perhaps it excited Rick Stryker.
Bottom line is that I was the first to call the short term bounceback to be a V and then that this V would flatten. See Willie above who called it a “V that got punched and got a droopy fat lip,” which agrees with how I called it. But you ridicule this.
If it is not what I and Willie say it is, what is it, Moses, what is it? Put up or shut up.
Larry Kudlow replaces The Onion!
https://talkingpointsmemo.com/news/biden-camp-rnc-alternate-reality
‘In a three-minute pre-taped revisionist history lesson, White House economic adviser Larry Kudlow repeatedly referred to the coronavirus pandemic in the past tense, suggesting it was a once-in-a-century hurtle that the country has already surmounted. “It was awful,” Kudlow said, of the COVID-19 crisis that has killed more than 178,000 people in the United States and continues to kill more than 1,000 people per day as it did for five straight days last week. “Health and economic impacts were tragic. Hardship and heartbreak were everywhere,” he said. “But presidential leadership came swiftly and effectively with an extraordinary rescue for health and safety to successfully fight the COVID virus.” Kudlow is not unfamiliar with the kind of head-in-sand oblivion that he spewed on Tuesday. He had also famously asserted in late February that the coronavirus pandemic had been contained “pretty close to airtight,” and months later defended those claims to CNN anchor Jake Tapper in May, suggesting — as the coronavirus tore across the United States — that his winter remarks had been factual at the time.’
Youtube has the entire nonsense from Kudlow the Klown!
https://www.youtube.com/watch?v=vWRpKt3SPKU&feature=emb_title
It is too easy to take down this lying moron but let’s be fair. At least Kudlow admitted that the daily death count last week was awful. That make Kudlow the Klown more honest than Bruce Hall who told us the death count would be falling some 7 weeks ago.
Now if one listens to the first 60 seconds of Kudlow’s latest insanity, you might believe: (a) they inherited a recession from Obama; and (b) Trump’s trade policy was free trade. Yea this lying piece of garbage touted Trump as the architect of the best economic boom ever.
Now he babbled a lot about Trump’s brilliant response to this virus but once you pick yourself off the floor from laughing, you will be happy to know we are enjoying another economic boom right now. And of course they will be lots more tax cuts for everyone and less economic regulation.
People wondered if Don Jr. was on cocaine Monday night. I suspect Kudlow took a little coke before he made this stupid clip.
Haven’t seen a whole lot of discussion of supply vs demand effects – admittedly, I haven’t looked that hard. The change in spending decisions – an increase in the saving rate – could persist for quite some time. Capital spending has slowed enough that there is probably a net reduction in physical capital, and unemployment will lead to a loss of skill, relative to trend. There may be a voluntary decline in participation, too, to limit pre-schoolers’ exposure to infection – we don’t know whether some future vaccine with be approved for kiddos or how complete the immunity will e.
Both supply and demand effects are important, but I wonder which these forecasters see as the more important limit on growth.
@ macroduck
I think IL-SM framework strongly indicates demand would be the issue. I certainly would love seeing Paul Krugman address your question in one of his columns. This is an excellent question on your part, I lean strongly towards demand being the weightier part, but there’s enough unknown there in the numbers, your question is a great one.
IS-LM
I don’t even have the excuse of being up late when I typed that one,
If everyone wore a mask, we could recover quickly as China has done. But of course that won’t happen until we get leadership on masking up. So we are stuck in the mud until 2021 at least. Then we face demand destruction and if budget balancing comes back into fashion, we will be dead in the water.
i just reviewed today’s income and outlays report, and am quite surprised how much it suggests a V shaped recovery…real PCE fell 34.1% in the second quarter, but it rose 36.6% in July….that means that even if July’s real PCE growth does not improve from the July level during August and September, growth in PCE would still add more than 25 percentage points to the growth rate of 3rd quarter GDP…
use tables 7 and 8 in the full pdf: https://www.bea.gov/data/income-saving/personal-income
comparing July’s inflation adjusted PCE of 12,778.2 billion (2012$) to the 2nd quarter’s real PCE of 11,819.6 billion, you’ll find that July’s real PCE has grown at a 36.605% annual rate from the 2nd quarter