The December 2016 Wall Street Journal Economic Forecast Survey was published on December 8, 2016. The headline is “Economists Doubt the U.S. Can Regain Many of the Factory Jobs Lost in Recent Decades.”
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.
“Manufacturing employment is now back to 1941 levels and falling,” said James Smith, chief economist of Parsec Financial. “This is a global trend and not at all specific to the U.S. It is caused by labor productivity growth.”
Yet many of the economists in the survey agree with Mr. Smith that the biggest reason so many fewer people work in today’s factories are advances in automation. Improvements in assembly-line technologies and the deployment of industrial robots allow U.S. manufacturers to produce more goods than ever before, but with much smaller workforces. Even if all outsourcing were ended immediately, the march of technology would put steady downward pressure on manufacturing employment.
Asked about the primary cause of the decline of manufacturing jobs, 47% of respondents pointed to automation while 18% said automation and offshoring had played roughly equal roles. About 28% said offshoring had been the primary culprit.
As stated in the article, the survey’s respondents were 62 academic, financial and business economists.
As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 16.79%. The individual estimates, of those who responded, ranged from 0% to 65%. For reference, the average response in November’s survey was 18.54%.
The current average forecasts among economists polled include the following:
full-year 2016: 1.9%
full-year 2017: 2.4%
full-year 2018: 2.4%
full-year 2019: 2.2%
December 2016: 4.7%
December 2017: 4.5%
December 2018: 4.4%
December 2019: 4.6%
10-Year Treasury Yield:
December 2016: 2.34%
December 2017: 2.79%
December 2018: 3.23%
December 2016: 1.9%
December 2017: 2.4%
December 2018: 2.5%
Crude Oil ($ per bbl):
for 12/31/2016: $50.66
for 12/31/2017: $55.58
for 12/31/2018: $57.19
(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 2247.85 as post is written