The October 2017 Wall Street Journal Economic Forecast Survey was published on October 12, 2017. The headline is “Economists See GOP Tax Plan Producing Growth Spurt, But Split Over Long-Term Effect.”
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.
An overwhelming majority of forecasters in The Wall Street Journal’s monthly survey of economists said the GOP tax plan unveiled last month would, if implemented, raise the growth rate for U.S. gross domestic product over the next two years. Some 60% saw a modest lift to output compared with its current trend, while 27% said the annual growth rate would jump by more than half a percentage point.
The announced framework, which lacks some details and could change as lawmakers flesh it out in the coming weeks, features lower tax rates on corporate profits, incentives for business investment and fewer individual income tax brackets, among other changes.
But roughly half of the economists said any growth spurt would fade over time. Asked about the tax plan’s likely effect on the economy’s long-run growth rate, 48% predicted a modest increase while 38% said the U.S. would remain on its current trajectory. Just 4% said the tax plan would boost the GDP growth rate by more than 0.5 percentage point a year, while 10% said growth would be slower than if there had been no tax changes.
As for the federal budget deficit, 85% of economists said the GOP tax plan would cause it to widen over the next decade.
As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 15.85%. The individual estimates, of those who responded, ranged from 0% to 33%. For reference, the average response in September’s survey was 16.08%.
As stated in the article, the survey’s respondents were 59 academic, financial and business economists. Not every economist answered every question. The survey was conducted October 6-10.
The current average forecasts among economists polled include the following:
full-year 2017: 2.3%
full-year 2018: 2.4%
full-year 2019: 2.0%
December 2017: 4.2%
December 2018: 4.0%
December 2019: 4.1%
10-Year Treasury Yield:
December 2017: 2.46%
December 2018: 3.00%
December 2019: 3.30%
December 2017: 1.8%
December 2018: 2.2%
December 2019: 2.4%
Crude Oil ($ per bbl):
for 12/31/2017: $50.26
for 12/31/2018: $52.51
for 12/31/2019: $53.64
(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 site 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 2553.80 as this post is written