Archive for the ‘Economic Forecasts’ Category

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Macroeconomic Advisers On Possibility Of Double Dip

Thursday, June 24th, 2010

I found this June 10 blog post, titled “The Chances of a ‘Double-Dip’ are Essentially Nil” by Macroeconomic Advisers to be notable.

Of course, I am not in agreement with those that believe any material further economic weakness will be avoided.  However, many economists feel differently; as I have noted in the post of June 14 concerning the latest Wall Street Journal Economic Survey, “The economists in the survey put the odds of a double-dip recession at 19%.”

Some of my other thoughts on the idea of a “Double-Dip” scenario can be found at this March 8, 2010 post.

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ECRI On Frequency Of Recessions

Wednesday, June 23rd, 2010

I recently came across a notable excerpt in ECRI’s “U.S. Cyclical Outlook” of December 2009 (pdf):

“The bottom line is that long expansions are needed after severe recessions to undo the damage.  After the 1932-33 depression, not even four years of expansion were quite enough, despite 10% annual GNP growth.  This time trend growth is likely to be far lower, and the danger of frequent recessions accordingly higher.”

my comment:

I find the above excerpt interesting and notable.   While I don’t necessarily agree with ECRI’s current forecast or economic interpretations, the concept of Sustainable Prosperity is one that I have frequently written of, and it is imperative that we, as a nation, should consider our longer-term economic plight as we seek to improve our current economic  condition.

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Larry Summers On The Economy

Monday, June 21st, 2010

Saturday’s (June 19) Boston Globe contained an interview with Larry Summers on the state of the economy.

I found the phrasing in a couple of his statements, as seen below, notable:

“Summers, the former Harvard University president and Treasury secretary under President Clinton, presented a cautious, measured view of economic conditions. For example, after expressing confidence that European policy makers would contain the government debt crisis and avoid another global financial crisis, he added that the assessment was “my best guess, and I could be wrong.’’

Or, when asked if the nation had achieved a self-sustaining recovery, Summers responded, “I think that’s the right presumption and my expectation. I wouldn’t be foolish enough to be certain.’’”

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ECRI WLI Interpretation & Commentary

Wednesday, June 16th, 2010

The recent steep fall in the ECRI WLI has been widely commented upon.

I’ve recently run across two items, an article and an interview, that I think are very notable with regard to interpreting the WLI.

The first is an article ( “Is ECRI Growth Rate Index Signaling A Double Dip?”) that discusses the predictive history and interpretation of the WLI.  The second is a June 11 CNBC interview of ECRI’s Lakshman Achuthan about the recent drop in the WLI and how he believes it should be interpreted.

Although I indicate the level of the ECRI WLI on a monthly basis (“Updates On Economic Indicators”), my only previous commentary on ECRI and the ECRI WLI can be found at this post of July 15, 2009.

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SPX at 1115.23 as this post is written

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Bloomberg BusinessWeek Story – Wall Street’s Biggest Bears

Tuesday, June 15th, 2010

The June 14-June 21 2010 Bloomberg BusinessWeek had a cover story titled “Time to Slip Into Something Less Comfortable?”

The subtitle reads: “The bearish forecasters who rose to fame in the market crash of 2008 have, for the most part, not surrendered their pessimism.  Their moment could be coming back around.”

While I don’t necessarily agree with all of the comments by the prognosticators in the article, I do think that many of them deserve contemplation.  The article appears to be a good summary of their many concerns.

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Ben Bernanke’s Comments On The Current Economic Forecast

Tuesday, June 15th, 2010

I found Ben Bernanke’s comments on the economic outlook, given last Wednesday (June 9), to be interesting.

Here are some excerpts, as published in this Wall Street Journal article of June 10:

“Federal Reserve Chairman Ben Bernanke offered guarded reassurances about the economy in testimony to the House Budget Committee Wednesday, saying a new recession is unlikely and that the Fed still expects the U.S. economy to grow at a 3.5% annual rate in the months ahead.”

also:

“”Forecasting is very difficult and I make no promises in any particular direction,” he said, “but it appears to us that the recovery has made an important transition from being supported primarily by inventory dynamics and by fiscal policy toward a recovery being led more by private final demand.” Still, he added, a double-dip recession couldn’t be “entirely ruled out.”"

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The June 2010 Wall Street Journal Economic Forecast Survey

Monday, June 14th, 2010

I found The June Wall Street Journal Economic Forecast Survey was interesting on a couple of fronts.

First, as stated in the article, “The economists in the survey put the odds of a double-dip recession at 19%.”

Second, as seen in the detail of this survey, the survey now includes more forecast information for December 2011. The current average forecasts for December 31, 2010 and December 31, 2011 among economists polled include the following:

Ten-Year Treasury Yield:

for 12/31/2010: 3.87%

for 12/31/2011: 4.58%

CPI:

for 12/31/2010: 1.4%

for 12/31/2011: 2.0%

Unemployment Rate:

for 12/31/2010: 9.4%

for 12/31/2011: 8.6%

Crude:

for 12/31/2010: $76.82

for 12/31/2011: $80.87

GDP:

full-year 2010 : 3.2%

full-year 2011 : 3.1%

Of note, with the exception of the GDP and Unemployment Rates , the above categories did see significant change in average expectations since last month’s survey.

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with the many of the consensus estimates and much of the commentary in these forecast surveys.

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SPX at 1097.32 as this post is written

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S&P500 Earnings Forecasts & Forecast Accuracy

Thursday, June 10th, 2010

On June 1 The Wall Street Journal had an article titled “Analysts Cheer For Recovery.”

From the article:  “Current estimates put the S&P 500 on track for earnings per share of $85.26 this year, according to Thomson Reuters, a return to 2007 levels. Analysts’ $96.61 forecast for 2011 earnings would mark a record that surpasses the 2006 peak.”

However, what I found most notable is a quote from Ed Yardeni, with regarding to analyst forecasts:

“They’re pretty good at anticipating earnings when the economy is expanding,” says Ed Yardeni, president of Yardeni Research, “but they typically don’t see recessions coming.”

One of the most notable aspects of the economic weakness of  2008-early 2009 was that economic forecasters almost completely failed to predict it.  I believe that this is very significant for a variety of reasons;  perhaps foremost is whether this inability to predict the last economic crisis is indicative of whether they will be able to foresee the next one.

I’ve put together some examples of forecasts in the 2007 to early 2009 time period; it can be found at this link (also listed under “Predictions” along the right-hand side of the home page).

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Updates On Economic Indicators

Wednesday, May 26th, 2010

Here is an update on various indicators that are supposed to predict and/or depict economic activity.  These indicators have been discussed in previous blog posts:

The May Chicago Fed National Activity Index (CFNAI) (pdf) updated as of May 24, 2010:

The Consumer Metrics Institute Contraction Watch:

The USA TODAY/IHS Global Insight Economic Outlook Index:

An excerpt of May 24, 2010:

“The May update of the USA TODAY/IHS Global Insight Economic Outlook Index shows strong growth in real GDP, at a six-month annualized growth rate, in April and May followed by slower, yet solid, growth in June through October. Increased consumer and business spending will fuel strong growth into the second quarter, but tight credit, high debt and still-high unemployment will moderate growth in the second half of the year.”

The ECRI WLI (Weekly Leading Index) : Last updated 5/14/10:

The WLI is at 127.3

The Dow Jones ESI (Economic Sentiment Indicator):

The Index as of April 30 was at 38.3.  The title of the April 30 news release is “Dow Jones Economic Sentiment Indicator slips to 38.3 for April; signals that Recovery has yet to firmly take hold.”

The Aruoba-Diebold-Scotti Business Conditions (ADS) Index

Here is the latest chart, updated through 5-15-10:

“New Financial Conditions Index”

I had a post of this index on 3/10/10.  There is currently no updated value available.

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I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

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The May 2010 Wall Street Journal Economic Forecast Survey

Monday, May 17th, 2010

The May Wall Street Journal Economic Forecast Survey focuses on the economic problems in Europe and the odds of The Federal Reserve increasing interest rates.

As seen in the detail of this survey, the current average forecasts for December 31, 2010 among economists polled include the following:

Ten-Year Treasury Yield: 4.16%

CPI: 1.8%

Unemployment: 9.3%

Crude: $81.56

GDP (full year 2010) : 3.2%

GDP (full year 2011) : 3.1%

Of note, with the exception of the Crude forecast, the above categories have not seen much change in average expectations for up to a year.

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with the many of the consensus estimates and much of the commentary in these forecast surveys.

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SPX at 1135.68 as this post is written

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