The July 2016 Wall Street Journal Economic Forecast Survey was published on July 14, 2016. The headline is “WSJ Survey: Half of Economists See No Fed Rate Increase Until December.” As indicated in the article, 60 economists were surveyed, although not every economist answered every question.
I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.
The private forecasters on average saw the fed-funds rate at 0.61% at the end of 2016, suggesting one quarter-percentage-point rate increase this year. They expect another rate increase by June next year and a further one or two by the end of 2017, according to the survey.
Financial markets doubt the Fed will move its benchmark federal-funds rate off the range of 0.25% to 0.50% this year, with fed-funds futures on Thursday morning suggesting a 34% chance of rates rising a quarter percentage point by the Fed’s December meeting, according to CME Group.
As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 21.91%. The individual estimates, of those who responded, ranged from 1% to 60%. For reference, the average response in June’s survey was 20.74%.
The current average forecasts among economists polled include the following:
full-year 2016: 2.0%
full-year 2017: 2.2%
full-year 2018: 2.1%
December 2016: 4.7%
December 2017: 4.6%
December 2018: 4.7%
10-Year Treasury Yield:
December 2016: 1.78%
December 2017: 2.30%
December 2018: 2.79%
December 2016: 1.8%
December 2017: 2.2%
December 2018: 2.2%
Crude Oil ($ per bbl):
for 12/31/2016: $47.36
for 12/31/2017: $54.03
for 12/31/2018: $57.80
(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” category)
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 necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 2161.92 as post is written