The March FT-Booth survey is out; median q4/q4 growth for 2025 is 1.6%, down from 2.3% in the December survey (see this post for comparison to FOMC SEP, the median entry is 1.7%). The average 90th/10th bounds are also interesting, in that large downside risks are perceived.
Figure 1: GDP as reported (bold black), March FT-Booth median (blue square), 90/10 percentile bounds (gray dashed lines, gray +), Chinn forecast (red triangle), GDPNow of 3/18 adjusted for gold imports (brown square), NY Fed nowcast of 3/14 (inverted green triangle) all bn.Ch.2017$ SAAR. Source: BEA, FT-Booth, Atlanta Fed, NY Fed, and author’s calculations.
The average 10th percentile reading is 0.5% q4/q4 growth, down from 2.0% in December (!).
Respondents’ modal response for recession start is still 2026Q3, but ascribe a higher likelihood to an earlier start.
Notes: Proportion of responses in March survey. Percentages in blue indicate December survey.
The proportion of respondents who believe a recession begins in the second half of 2025 have risen from 14% to 24%, in the first half of 2026 from 20% to 26%. That means half of the respondents believe a recession will have started by 2026H1, up from 36%.
As of yesterday’s close, the 10yr-3mo Treasury spread is -8 bps, having inverted since inauguration day.
Figure 2: 10yr-3mo Treasury term spread (blue, left scale), 10yr-2yr Treasury term spread (red, left scale), 1yr-Fed funds spread (light green, left scale), all in %, VIX at close (green, right scale). Source: Treasury, CBOE via Treasury.
Secretary of Treasury Bessent’s interview:
https://www.nbcnews.com/meet-the-press/video/treasury-sec-bessent-says-he-s-not-worried-as-stock-markets-plunge-full-interview-234536517647
bruce, why if there is a drop in stocks with Biden, political hacks like you jump all over the sky is falling? but when the stock market drops for trump, all is fine and the drop is good to clean out the system? seriously bruce, how can you be so hypocritical? a tanking stock market and inflation is ok now, but a growing stock market and strong economy were a “disaster” a few months ago? and you are ok with bessent supporting musk and tesla by taking doge money and using it to backstop the Tesla stock drop? why is the us government spending money on Tesla stock, bruce?
I kinda think, based on no evidence whatsoever, that the profession is better at forecasting small-to-moderate deviations from trend than big ones. Which is just a weasely way of repeating Bill McBride wisdom: recession forecasting is a mugs game.
A small-to-moderate change in the inputs to C, I,G or X can be assessed in the conventional way, with a conventional amount of slop in the forecast. Seventies-style oil shocks, gigantic balance-sheet contractions, pandemics, continental wars – all game changers. When the game changes, handicapping the results becomes much more difficult.
The felon-in-chief is explicitly aiming at changing the game. That creates uncertainty about economic performance not only because we don’t know what the rules will be, but also because we don’t have a strong grasp on the consequences of any new rules.
Menzie adopts the McKibben estimates in his GDP. That’s clear, understandable and reproducable. Still, those estimates may be wrong both because they are based on assumptions about future policy and because they may be wrong about the effect of any set of policies. If we had five McKibbens (which we probably do have) and created a range of estimates, that would be good, too. But in the end, it’s the inputs and the break with the past that make the forecast wobbly when the game changes, not the method of forecasting, so we can’t expect reliable forecasts.
Partisan blatherers would say “so you don’t know the felon-in-chief’s policies are bad”. Yes, we do. We simply can’t know how bad.
Okay, here’s one I almost missed — like whaaat?
When Netanyahu was in the White House last month he presented Trump with a gold-plated pager as a souvenir of his pager attack in Lebanon that killed 37 and injured over 3,000 including women and children as innocent bystanders. It displays “Press with both hands”. Ha, ha — what a sense of humor.
Two psychopaths alike. What, Netanyahu didn’t have any necklaces of human ears to present instead?
And to top it off, Netanyahu gave a silver-plated pager to — wait for it — John Fetterman. Silver, because you can’t disrespect Trump.
You can see it here: https://www.timesofisrael.com/pms-office-confirms-netanyahu-gifted-trump-a-golden-pager-at-white-house-meeting/
I recently pointed out Gillian Tett’s bland impartiality toward the monkeys-with-clubs policy approach at the White House. Turns out, Tett is not alone. Adam Tooze includes Tett in his list of several FT folk engaged in sanewashing the felon-in-chief’s agenda:
https://adamtooze.substack.com/p/chartbook-363-stockholm-syndrome
Tooze’s point is not that the FT is particularly bad – he says sanewashing is happening everywhere. In fact, you can find Mohamed El-Erian calling the felon-in-chief’s tariffs an effort to make the global trading system “fairer”. (El-Erian works for Allianz. Draw your own conclusions.)
Tooze’s particular focus is on what’s being called a “Mar-el-Lago accord”. Keep in mind, we don’t have the specifics of a Mar-el-Lago accord because no official proposal exists. What we have is “A User’s Guide to Restructuring the Global Trading System”, Stephan Miran’s audition to work for the felon-in-chief. That paper is a masterpiece of sanewashing. Find it here:
https://www.hudsonbaycapital.com/our_research
Miran’s paper is less analysis than it is fauning, and it wanders a bit, but two things do stand out. One is that it amounts to a ransom letter – other countries simply have to give the U.S. what the U.S. demands. The other is that most of the financial elements amount to default on U.S. obligations to its creditors.
So that’s where we are – some pipsqueak finance guy at an also-ran investment firm wrote a fan-boy paper, and now “serious” people are pretending it’s a serious proposal. You all know what that means; a new front may be opening in the felon’s war on sane governance. Non-trade elements of Miran’s paper may be next on the felon’s agenda, and those elements risk financial shock, including implicit default on U.S. Treasury debt, forced changes in portfolio duration and payment schedules. This risks forced selling of assets as an unforseen (unforseen by felon worshippers and sanewashers) consequence of changing the risk profile of the world’s “risk-free asset”.
Just think of all the opportunity to say “I never said I SUPPORTED Trump’s agenda. I was just doing my job as a journalist (analyst, pundit, banker, investment manager)”. They’ll still have jobs, because they played along.
Because our felon-in-chief tosses so much dust in the air, important developments can slip through the cracks unnoticed. Adios is on the job, though:
https://www.axios.com/2025/03/20/us-israel-meetings-iran-nuclear-program
Now, we can’t know what the felon is actually going to do – he says all kinds of nonsense – but he and Israel’s felon-in-chief will meet next week to discuss Iran’s nuclear program. Our felon has given Iran a two-month deadline to negotiate a new nuclear arms deal, and that is the context for next week’s meeting. So while we’re all distracted by tariffs and threats to our system of governance, Jewel has renewed its war in Gaza and will undoubtedly urge the U.S.U.S. to strike Iran.
The best we can hope for is a NAFTA outcome; our felon knocks down an existing agreement and then stands it back up again with a shiney picture of himself on top. I don’t think our felon is gonna do that with the Iran deal, because his voters mostly don’t care much about Iran or the Middle East.
Not “Jewel”. Israel.
Forget Iran. This is just crazy. Trump has given security clearance to Elon Musk to be briefed tomorrow on the details of contingency plans for war with China. Up to now, Musk has been unable to get high clearances, for multiple reasons, even though his company SpaceX works closely on highly secret defense space projects. In fact, Musk is excluded from meetings that his SpaceX engineers have on these projects due to his lack of clearance.
So this guy who has a two multi-billion dollar Tesla factories in Shanghai and where a third of his world sales occur, now has the secret plans regarding China. Note that Musk has been unusually friendly with the Chinese government, even so as to earn an unusual exemption from the operations sharing requirements for other US corporations in China. Musk has also voiced his Xi friendly opinion that Taiwan is a part of China the way Hawaii is a part of the United States.
Musk is highly compromised and there is no way that he could get a security clearance through normal channels except that the President has the power to grant clearance to anybody, even his similarly compromised son-in-law Jared.
President musk. And dont you forget it.