The Current Administration’s Current Official Economic Forecast

Illustrated (red squares):

Figure 1: GDP as reported (black), Administration current forecast (red squares), and WSJ December survey mean (blue). Trough assumed to be 2020Q2. Source: BEA, OMB, WSJ, NBER, and author’s calculations.

If you thought it odd that the Administration never revised its GDP forecast to account for…reality — you are not alone. It should have occurred during the Mid-Session Review, which is usually released in July. But you can see from the budget components released November 4th that the GDP forecast is identical to the February Budget forecast:

Source: OMB, FY 2021 Budget based on MSR indicating no change in economic assumptions.**

From Chapter 2 “Economic Assumptions and Overview” of the MSR:

The American economy continues the longest expansion in its recorded history. The unemployment rate reached its deepest level in half a century. Prime-age labor force participation has hit decade highs. Real wages sustained their rise. Deregulation has removed  over seven substantial regulations for each one added. The Tax Cut and Jobs Act (TCJA) expanded the capital base and encouraged multinational enterprises to repatriate nearly $1 trillion previously invested abroad.

Discordant elements perturbed this harmonious expansion. The Federal Government’s deficit swelled as large spending increases were approved. Poor performance in the global economy,  industrial turmoil at flagship U.S. companies, and international trade uncertainty subdued business confidence, investment growth, and manufacturing output. In order for 2020 to extend the economic expansion of the past three years, continued implementation of  the Administration’s pro-growth agenda is imperative.

[Boldface added – MDC]

** Summary of MSR:

In most years, OMB goes beyond the statutory requirements for the MSR and develops a
revised set of economic variables that agencies use to develop re-estimates of baseline outlays and spending. This year, given the jump in economic uncertainty caused by the COVID-19 public health emergency and the resulting economic downturn, the MSR does not report updated economic assumptions or provide updated revenue and deficit estimates for the budget window. Any such estimates would be entirely speculative, given the range of uncertainty underlying potential future paths of economic growth.

43 thoughts on “The Current Administration’s Current Official Economic Forecast

  1. pgl

    And we were told that Krugman was being overly optimistic about 2021!

    Speaking of forecasts – Team Trump said we would have 20 million vaccinations in people’s arms by December 31. Well, it is New Year’s Day. How did that forecast turn out?

  2. pgl

    I’m looking at what CBO is saying for potential real GDP for the end of 2022. This will be shy of $20 trillion in terms of 2012$. But your chart seems to suggest that Team Trump is forecasting real GDP to be $21 trillion if I’m reading this right.

    Maybe a comment is in order contrasting their forecast to what CBO says is potential output.

  3. pgl

    “Over the past 3 years, my Administration has worked tirelessly to restore America’s economic
    strength. We have ended the war on American workers and stopped the assault on American industry, launching an economic boom the likes of which we have never seen before. While our incredible economic turnaround came as a shock to most career politicians in Washington,
    it is no surprise to millions of hard-working families across the Nation. Their natural talent, ingenuity, and strength simply needed an opportunity to flourish, free from the massive regulations and taxes heaped upon them by their Government. As my Administration continues to remove these burdens, our economy continues to surpass expectations. We are growing faster than the experts thought possible. The unemployment rate is at 3.5 percent, the lowest it has been in 50 years. And more Americans are working today than at any point in our history. Today’s tremendous job market is leading employers to realize the vast potential of many individuals they previously overlooked. Over the past 3 years, the employment rate of our prime-age workers has skyrocketed, and wages are growing the fastest for historically disadvantaged workers, reversing trends under the previous administration.

    What a partisan load of rubbish. Does the President normally get to write a campaign ad in this document? Now I get that this was written in February but no mention of the COVID19 crisis? We know he was aware of this issue but of course the Clown in Chief could not bother to mention it.

    1. PeakTrader

      I predicted without the China virus, the expansion would continue into 2021 with a mild recession in 2021, extending the longest expansion in U.S. history with a mild recession in 2021 and stronger growth in the 2020s from the children of the Baby Boomers entering prime age, less regulation, and the business tax cuts. Much of the lost output in the Obama years would’ve been partially recovered from the long expansion and mild recession.

      [With this comment, I am banning PeakTrader forthwith for use of racist xenophobic terminology — effective 1/1/2021, MDC]

      1. pgl

        You predicted? You? Now please tell us your published forecast record on these things? Oh you do not have one. How about all your publications in referred journals? Oh that is an empty set too. Peaky – if you predicted a certain stock was going to soar, I’d sell it short and make a fortune.

      2. pgl

        “Much of the lost output in the Obama years would’ve been partially recovered from the long expansion”

        You cannot even get economic history right. The Great Recession started in Dec. 2007 when Bush43 was President. Everyone knows that except PeakMoron. Now we did see a long expansion that started in late 2009. FYI you partisan clown – Obama was President for the next 7.5 years. Trump was lucky enough to inherent a booming economy and it did not take long for this incompetent to screw it up.

      3. pgl

        “stronger growth in the 2020s from the children of the Baby Boomers entering prime age”

        The Baby Boomers range from age 55 to 75. I guess you think most of them waited until their 40’s to have their first child.

        Come on Peaky – please tell us why EVERYTHING you write is so INCREDIBLY STUPID!

      4. 2slugbaits

        PeakTrader Woulda, coulda, shoulda. What might have happened absent COVID-19 is something we’ll never know for sure, but there were plenty of signs that the economy was on the verge of a (perhaps mild) recession well before COVID-19 hit. Recall that the yield curves had inverted. Real GDP growth fell from 3.0 in 2018 to 2.2 in 2019. And within that, Gross Domestic Investment fell from 6.3 percent growth in 2019 down to 1.7 percent in 2019. Not exactly the kinds of signals you’d expect to see from businesses that were not concerned about a looming recession.

        And the GDP-Based Recession Index was starting to rise to a non-trivial level:

        The Industrial Production Index was flat (at best) throughout 2019:

        And then there was Trump’s idiotic trade war.

        There may or may not have been a recession in 2020 we not suffered the COVID hit, but even if we had avoided a recession and COVID it’s highly unlikely that we would have seen anything other than anemic growth in 2020.

        Also, Trump needs to be held to account for weak growth in the future. Thanks to his indifference to the pandemic the US has suffered more than it should have. A lot of people will be permanently disabled and less productive than they would have been if Trump had done a better job of managing the pandemic. Trump tried to minimize the hit to short-term economic growth at the expense of longer term growth. The lesson he should have learned from 1918 is to take your economic lumps early and you’ll be better off in the long run.

        1. Barkley Rosser


          This last point is the important one. We do not know and it does not matter whether or not there would have been a recssion in 2020 without the pandemic. But there is no doubt that Trump made it much worse with many more deaths and damage to the economy than needed to be if he had followed more reasonably policies like most leaders of other nations did. Maybe at some point somebody will try to measure the scale of that damage to the economy, but it will have to wait until the pandmic is over, which is still some ways away unfortunately.

      5. Menzie Chinn Post author

        PeakTrader: Using “China virus” I have decided falls under the racist category. You are banned from further commenting on my posts, effective 1/1/2021.

      6. SecondLook

        I’ll tell you what, I am willing to start calling it the China virus if you are willing to go around insisting that everyone call the Spanish Flu, the Kansas virus. since the first known case, worldwide, was reported at Camp Funston in Fort Riley, Kansas, on March 11, 1918.
        Sound reasonable enough to me…

        1. Steven Kopits

          That would seem accurate.

          A China virus is not racist, it’s placist. Other places with epidemics (arguably all racist): Spanish flu, German measles, Lassa fever, West Nile virus, Rocky Mountain spotted fever, Lyme Disease (Connecticut), Ebola Fever, MERS (Middle East Respiratory Syndrome), Zika fever, Japanese encephalitis, Marburg Virus, and Norovirus (Norwalk, Ohio). And let’s not forget Legionnaire’s disease, discriminatory against veterans!

          I think a Chinese-American professor censoring criticism of Xi’s China is a really bad idea. A really, really bad idea.

          1. Menzie Chinn Post author

            Steven Kopits: We have an officially defined term for it – Covid-19, to distinguish it from what could be called “the other China flu”, SARS. I’m in favor of de-geographically-linking diseases myself, even if “Fort Riley Flu” is more alliterative and accurate than “Spanish Flu”.

            I am not censoring criticism of Xi’s China; I’m just removing from this blog xenophobic tropes. In fact, from what you have just written, it is quite clear you have absolutely no idea what I think of the CCP.

          2. 2slugbaits

            Steven Kopits Just to be clear, the Spanish flu wasn’t identified as such out of any prejudice or ethnic hatred of Spaniards. The Central Powers, the Triple Entente and the Americans wanted to pretend that the virus was nowhere near the battlefield. Calling it the “Spanish flu” made it sound like the Western front was a safe place to be.

            As to “German measles”, that term refers to the fact that Rubella was initially described by three 18th century German doctors. Not only was there nothing racist about the term, but the term was seen as a way of honoring those doctors.

            Trump’s use of the term “China virus” wasn’t just a feeble attempt to shift blame away from his own inept handling of the pandemic, but it also stigmatized Asian-Americans.

          3. baffling

            “A China virus is not racist, it’s placist.”
            the context that it is used by trump and his followers is racist. the problem we have in america today, is people like steven who give a pass to all these bad things. have a spine steven, and stand up for what is right. your comment is equivalent of there being good people on both sides of the Charlottesville riots. quit protecting bad people. history will judge your actions (or inactions) harshly.

          4. Steven Kopits

            I personally do not think it unfair to describe it as ‘the China virus’, just as I refer to the GFC as the China Depression (the country’s bursting on to the global labor and goods market, with associated savings, precipitating both an oil shock and a speculative financial bubble).

            To recap: The virus was first detected in China. It either originated naturally or was created in the lab at Wuhan. I would put my money on the latter. The Chinese authorities then suppressed their own experts and delayed informing others, thereby insuring a global pandemic. They further appeared to destroy necessary evidence and have been wildly less than helpful.

            So I think there’s good cause to call it a ‘China virus’ and indeed blame Chinese authorities — not the Chinese people — but Chinese authorities likely including the management at the Wuhan lab, and local and national health officials and politicians who suppressed news of the outbreak and withheld critical, timely information both domestically and from foreign experts. If the virus was created or modified in the lab — which I personally think is most plausible — I doubt that it was released intentionally, but I would hardly be surprised that a lab in a fast-developing but still comparatively lower income country might have less than air-tight safety practices. In such an event, it would arisen from the mismatch between technical capabilities and underlying social development. In communist Hungary, for example, stealing from one’s employer would have been routine, in part due to low wages and in part because no one really cared in state-owned enterprises. That this might occur in entrepreneurial China would come as no surprise to me. Thus, I find reports that researchers sold lab animals on the open market for cash entirely plausible, and this may have been one channel of the outbreak. Other safety lapses would not surprise me either.

            In any event, I do not think it unfair to call it the ‘China virus’, even if convention might prefer covid or coronavirus.

          5. Steven Kopits

            OK, Menzie. Let’s litmus test you on China. Do you think Xi should call a free and open election? Do you think the Chinese are the equal of westerners — or regionally, the Japanese, Koreans, Taiwanese, Philippinos, Thais, Indonesians and even the Burmese (Myanmarese? yuck.) — and have the right to elect their own officials?

            I am frankly astounded that no one is calling for free elections in China. Don’t you think the western world should be pressuring China to have free elections? Shouldn’t China be a democracy?

          6. Menzie Chinn Post author

            Steven Kopits: (1) Yes. (2) Equal in what sense? But yes, they have the right to free elections.

            No one is calling for free elections in China? I’m sure lots of people are. In any case, I think you have me confused with somebody else who has defended Xi, as I can’t recall having ever written anything in defense of the man or the CCP.

          7. Steven Kopits

            Baffs –

            If you are looking for me to defend Trump, you’re knocking on the wrong door.

            I am, however, worried and appalled that 140 Congressmen and at least 11 Senators would be willing to challenge the presidential election results. And they are doing this because the public on the right wants them to do it. Rand Paul — Rand Paul! — was challenging the election in a hearing in the Senate. And next day, we received a fund-raising note from his people. At this point, it looks to be like a substantial minority of this country is thinking that dumping democracy might be a good thing.

            For most of you, things like fascism, communism and populism are academic concepts. My family lived through all of them, losing much during the war and subsequently everything they valued to communism in Hungary and later being forced from Argentina by Peronist populism.

            The strength of liberalism — and I include fiscal conservatives structurally on the left, as you know — is its commitment to openness, to due process, to individual rights, to reason, impartiality, competence and technocracy. That’s the sales pitch. When those on the left start to resort to censorship, to try to end debate and exclude opposing voices, then the left has not much to offer to the center. And those in the center — the suburban middle class — will support fascists over communists every time. They did in Spain, in Germany and Italy. They will in the US, if it comes to that.

            I think we are entering a tricky period, and I can only wonder what would have happened in the absence of the pandemic and if Trump were even remotely competent. If we had someone of the quality of Orban and an economy and society free of covid, we could be in serious trouble, in my opinion. Just so you understand: In Hungary, the far party Jobbik Party — this is the party to the right of Orban and FIDESZ — has as many seats in parliament as the socialists and liberals combined. In the last election, the right and far right took 70% of the vote and 80% of the seats in parliament. Those trends are headed our way, I think.

            So, if you want to be on the left, you had better be selling light and openness. If you want to sell darkness, the right will beat you on that field anytime. It’s the wrong strategy for liberals, in my view.

          8. noneconomist

            Remember “Kung Flu”? That characterization has been used multiple times by Trump and his surrogates.
            Very little geographical intent with that term.
            Listen to how “China” is used and pronounced, and—unless you’re on that Egyptian River floating blissfully—you get a pretty clear idea of the meaning.

          9. Baffling

            “ If you are looking for me to defend Trump, you’re knocking on the wrong door.”
            Steven, when you say things like the “china flu” and defend its use, you are defending trump. Period.

      7. macroduck

        THANK YOU Menzie!

        I do think lies ought also to be grounds for banning, but that’s your call.

  4. PeakTrader

    And, given the costs of capital have declined for businesses, real wages can rise, particularly substantial increases in minimum wages.

    1. pgl

      You are now saying the cost of capital has declined? You were saying just the other day that real interest rates were about to rise. OK – that is the real return on government bonds and maybe you might be referring to the risk premium. If anything – that is higher too.

      Good God – PeakTrader cannot keep his lies straight. But I do see his racism has gotten him banned so his incessant nonsense may not plague us any more.

  5. ltr

    January 1, 2020

    How Israel Became a World Leader in Vaccinating Against Covid-19
    Badly hit by the coronavirus, Israel has distributed the first of two vaccine doses to more than 10 percent of its population. Prime Minister Netanyahu is leading the charge, bolstering his own battered image along the way.
    By Isabel Kershner

    JERUSALEM — More than 10 percent of Israel’s population has received a first dose of a coronavirus vaccine, a rate that has far outstripped the rest of the world and buoyed the battered domestic image of the country’s leader, Benjamin Netanyahu, at a critical juncture.

    Israel’s campaign, which began Dec. 20, has distributed the vaccine to three times as much of its population as the second-fastest nation, the tiny Persian Gulf kingdom of Bahrain, according to figures compiled mostly from local government sources by Our World in Data.

    By contrast, less than 1 percent of the population of the United States and only small fractions of the population in many European countries received a vaccine dose by the end of 2020, according to Our World in Data, though China, the United States and Britain have each distributed more doses overall.

    “It’s quite an astonishing story,” said Prof. Ran Balicer, the chairman of the national advisory team of experts that is counseling the Israeli government on its Covid-19 response.

    Israel’s heavily digitized, community-based health system — all citizens, by law, must register with one of the country’s four H.M.O.s — and its centralized government have proved adept at orchestrating a national inoculation campaign, according to Israeli health experts.

    With a population of nine million, Israel’s relatively small size has played a role as well, said Professor Balicer, who is also the chief innovation officer for Clalit, the largest of the country’s four H.M.O.s.

    An aggressive procurement effort helped set the stage.

    The health minister, Yuli Edelstein, said in an interview on Friday that Israel had entered into negotiations with drugmakers as an “early bird,” and that the companies were interested in supplying Israel because of its H.M.O.s’ reputation for efficiency and gathering reliable data.

    “We are leading the world race thanks to our early preparations,” he said….

    1. macroduck

      That line about early preparation needs further elaboration. Clearly, that’s the key. Ten percent is a heck of an accomplishment because it requires really good preparation, which in turn requires having systems in place to do the preparation. How dey do dat?

    2. pgl

      “Israel’s heavily digitized, community-based health system — all citizens, by law, must register with one of the country’s four H.M.O.s — and its centralized government have proved adept at orchestrating a national inoculation campaign, according to Israeli health experts.”

      We can learn a lot about how to provide health care from other nations – including having universal coverage.

  6. ltr

    January 1, 2021



    Cases   ( 428,510)
    Deaths   ( 3,356)

    Deaths per million   ( 365)


    July 4, 2020



    Cases   ( 29,170)
    Deaths   ( 330)

    Deaths per million   ( 36)

  7. Dr. Dysmalist

    “Discordant elements perturbed this harmonious expansion.” Among them, “Poor performance in the global economy, … and international trade uncertainty”. Perhaps due to inchoate/unhinged trade policies? And even in February, not even a cautionary mention of SARS-CoV-2?

    Boy, this economic forecasting for a GOP Administration looks really, really easy. Too bad it’s too late to get one of those gigs now. I guess I’ll just have to wait 4 years (8, if the country’s lucky) for the next chance 😉

  8. ltr

    A —– virus is not racist….

    [ Precisely what it is and what it is meant to be, and of course this is understood. We have had a president who cultivated and fostered racism as a political tactic, and that will have to be overcome for all our sakes. ]

    1. pgl

      You have to remember Stevie is trying to be like by Trump’s racist base. Ever noticed how he brags about getting on Fox and Friends.

      Yes PeakTrader is a racist. Stevie pooh knows that but gee he needs to get people to pay attention to his worthless blog. I surely do not.

  9. ltr

    January 1, 2021



    Cases   ( 20,617,346)
    Deaths   ( 356,445)


    Cases   ( 10,303,409)
    Deaths   ( 149,205)


    Cases   ( 2,639,773)
    Deaths   ( 64,765)


    Cases   ( 2,542,065)
    Deaths   ( 74,125)


    Cases   ( 1,755,937)
    Deaths   ( 34,388)


    Cases   ( 1,426,094)
    Deaths   ( 125,807)


    Cases   ( 582,697)
    Deaths   ( 15,606)


    Cases   ( 87,071)
    Deaths   ( 4,634)

  10. ltr

    January 1, 2021

    Coronavirus   (Deaths per million)

    UK   ( 1,089)
    US   ( 1,074)
    France   ( 991)
    Mexico   ( 971)

    Canada   ( 412)
    Germany   ( 409)
    India   ( 108)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 8.8%, 2.9% and 2.5% for Mexico, the United Kingdom and France respectively.

  11. ltr

    January 2, 2021

    Chinese mainland reports 22 new COVID-19 cases

    The Chinese mainland recorded 22 new COVID-19 cases on Friday, of which 8 were locally transmitted and 14 from overseas, the National Health Commission said on Saturday.

    Seven domestic cases in Liaoning Province and 1 in Beijing were reported.

    Nineteen new asymptomatic COVID-19 cases were also recorded, while 279 asymptomatic patients remained under medical observation.

    No COVID-19 deaths were registered on Friday. Meanwhile, 9 patients were discharged from hospital. The total number of confirmed COVID-19 cases in China reached 87,093, and the death toll stands at 4,634.

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    [ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been only limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 383 active coronavirus cases in all on the Chinese mainland, 10 of which cases are classed as serious or critical. ]

  12. formereconomist

    Menzie, you should know that a President’s forecast for budget in a mid-session review is a *policy* forecast. It is conditioned on all the President’s policies being implemented in full. Considering Trump’s policies *since the summer* have been for more aggressive fiscal stimulus than has been enacted (still are), the GDP forecast should greatly exceed what has been realized. Why would you not discuss this—it seems very important to the story you are trying to tell.

    1. Menzie Chinn Post author

      formereconomist: Thank you for telling me the President’s budget is a conditional one. You think enacting additional deregulation is going to spur additional 5% (not annualized) growth in second half of 2020? (The MSR was published on November 4th, so those policies would’ve had to had an effect in less than two months…)

      I’ve discussed the conditional aspect of Troika vs. CBO forecasts before, but this point seemed irrelevant to this particular exposition on the sheer mendacity of the Administration. The fact that you think it relevant here demonstrates that you have little attachment to reality.

      1. formereconomist

        Them’s fighting words. I emphasized fiscal stimulus, not deregulation, which can be on the order of 5% of GDP easily in two months! But more importantly: are you *sure* this is the MSR published on Nov 4? The hyperlink directory suggests a Feb forecast, which would explain why this forecast is identical to that in Feb. I don’t really remember the Admin providing a public update to the MSR, in fact I think I remember there was a controversy over them deciding not to make public their updated economic assumptions. So I suspect your argument should end up being “why haven’t they made public their updated assumptions” instead of “why do these assumptions look identical to the ones from Feb”–the answer to the second one, .I Think, is because they are.

        1. Menzie Chinn Post author

          formereconomist: What fiscal policies were proposed after 11/4? The table I use is from Budget, but used because, well because of what’s in the summary of MSR:

          In most years, OMB goes beyond the statutory requirements for the MSR and develops a revised set of economic variables that agencies use to develop re-estimates of baseline outlays and spending. This year, given the jump in economic uncertainty caused by the COVID-19 public health emergency and the resulting economic downturn, the MSR does not report updated economic assumptions or provide updated revenue and deficit estimates for the budget window. Any such estimates would be entirely speculative, given the range of uncertainty underlying potential future paths of economic growth.

  13. pgl

    This pandemic is creating a lot of weirdness with respect to transfer pricing enforcement including this:

    The Australian Tax Office has some “job keeper scheme”. WTF? Is this like the excuse for tax cuts for the “job creators”. Of course these pseudo supply side arguments never required jobs actually be created. So does one have to actually keep a job in order to get this subsidy.

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