GDP Trajectory: The View from Wall Street

The mean forecast trajectory keeps on rising as actual GDP outcomes keep on surprising on the upside (Q4 mean growth rose from 0.9% to 1.7% q/q AR since October), but forecasts are pretty dispersed, as shown in Figure 1.

Figure 1: GDP (black), Mean forecast GDP from January 2024 WSJ survey (blue),  20% trimmed high (for 2023 q4/q4) of Bethune/Boston College Economics. (gray), trimmed low of Swonk/KPMG (gray), CBO projection from December (red), GDPNow nowcast of 1/17 (light blue square), all in bn.Ch.2017$ SAAR. Source: BEA, WSJ surveys (various), CBO, and author’s calculations.

Neither mean nor median responses indicate a two quarter slowdown. Nonetheless, the 20% band low entry (for q4/q4 2024) from Diane Swonk (KPMG) indicates a 0% growth in Q1, and -1.30% q/q AR in Q2. About 22% of respondents predict two or more consecutive quarters of negative growth.

Recession probability declines again.

Figure 2: Probability of recession in the next twelve months. Source: WSJ survey, various issues.


8 thoughts on “GDP Trajectory: The View from Wall Street

  1. pgl

    Diane Swonk now works for KPMG? I guess Grant Thornton wasn’t make enough income off of tax cheats to keep her.,

    1. Ithaqua

      Yes, this is a huge f-ing deal. I sincerely hope and pray that Roberts and Comey pull back from the brink of “everything not explicitly permitted is disallowed.”

    2. Macroduck

      Frm the link, quoting the WSJ:

      “The late Justice Antonin Scalia supported Chevron after he joined the Court, but he later expressed misgivings as judges bowed to regulators even when they were stretching or rewriting the law….”

      If Scalia’s concern was poor dcisions by lower courts regarding the application of “Chevron”, well that’s what the Supreme Court is for, to correct the errors of lower courts. Till recently, that was preferred to overturning earlier Supreme Court decisions. In the time since Scalia was put on the Court, decisions by earlier Supreme Courts have been treated as if they were decisions made by lower courts – subject to being overturned by today’s Court.

      Which, of course, means that today’s Supreme Court rulings can be overturned by future Supreme Courts. And on and on. And given that decisions written by today’s Court has more regard for the views of British witch hunters from centuries before the founding of this country than for “settled law” decisions of the U.S. Supreme Court, there is every reason to overturn today’s rulings. This is a bad Court, making poorly founded, idiosyncratic decisions. Bunch of egotists.

  2. pgl

    Trump is bringing this up again?

    Former President Donald Trump claimed to have again “aced” an increasingly difficult cognitive test involving intricate math problems, but experts say the test is easy, and a mock exam contained simple questions—and no complex math equations. During a New Hampshire campaign stop Wednesday, Trump boasted about how he “aced” a cognitive test with questions including identifying animal shapes that progressively “got harder,” and included complex math problems. The 77-year-old said he’s “cognitively better now” than he was 20 years ago, which prompted him to ask former White House doctor Ronny Jackson—who reportedly said the exam “can be hard”—for a cognitive test.Trump went on to make a jab at President Joe Biden, saying Biden wouldn’t be able to get past the third question, and adding nobody would trust Biden to run a lemonade stand. Cognitive testing typically takes around 15 minutes and involves “simple tasks” like spelling words backwards or repeating lists, which are used in people who’ve shown signs of problems with thinking, memory or other brain functions, according to the National Library of Medicine. Though he didn’t specify which test he took, a mock exam of the Montreal Cognitive Assessment—one of the most common cognitive tests—includes a similar question about identifying animals, as well as questions involving word similarity and drawing a given time on a clock. The only math problem on the mock assessment was a serial sevens test, which requires the subject to count backwards in increments of seven, starting with the number 100.

    Now I know what you are thinking but let’s be fair to Trump. I hear Johnh has taken this test many times and has failed each every time.

    1. Ivan

      Big question is why would his doctor give him a cognitive test. Its not just that it is only hard for people with cognitive problems its also that nobody would be asked to take it unless there was some reason to think they had cognitive problems. Did Melania complain?

  3. pgl

    The Davos elite love Trump – go figure!

    Both publicly and privately, U.S. executives said at Davos they weren’t concerned if Donald Trump wins the 2024 presidential election.
    Banking leaders, in particular, expressed confidence that America will be OK if Trump returns to the White House.
    Several World Economic Forum attendees said non-American executives have privately expressed far more trepidation about a Trump 2024 victory than American leaders.

    1. Ivan

      I think the US executives have reached the conclusion that they can control Trump better than they can control Biden. Trump says a lot of big words, do very little and then proclaims that he has “fixed it”. They can ignore the theatrics, as long as they can haul in the dough.

      They were scared Trump would get rid of NAFTA – he pretended he did, but the reality was a NAFTA 2 (called something else) that basically had only a few little cosmetic changes from the original NAFTA. They can live with a con that makes the MAGA hats think they “got” Wall Street, as long as the corporations can snicker all the way back to their bank. Biden has done some real damage to them fighting monopolies and mergers, etc.

      I think they have concluded that a second term Trump will be so busy with his personal vendettas and shoveling public money into his own pockets, that he will leave them alone. Biden on the other hand would likely go even further in trying to control their exploitation of little people.

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