The April 2021 Wall Street Journal Economic Forecast Survey was published on April 11, 2021. The headline is “With Economy Poised for Best Growth Since 1983, Inflation Lurks.”
I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the forecasts section.
The U.S. has produced many more Star Wars films since 1983, but growth has never approached that level—until this year, if economists are right. Those surveyed by The Wall Street Journal boosted their average forecast for 2021 economic growth to 6.4%, measured as the change in inflation-adjusted gross domestic product in the fourth quarter from a year earlier. If realized, that would be one of the few times in 70 years that the economy has grown so fast.
Growth of 6% or better was more common before the 1980s, when underlying growth was higher and usually came right after recessions with the help of loose monetary and fiscal policy. The contraction in output in the first half of last year was far more severe than any previous recession, so a strong recovery was partly inevitable. Indeed, GDP rebounded strongly in the third quarter of last year.
The scale of federal stimulus is greater than in the previous recoveries, at nearly $6 trillion, or more than one-quarter of annual GDP. Mr. Reagan’s combination of tax cuts and military spending was spread out over a longer period, said Mr. Sinai. “It makes it hard for a forecaster because I’ve not seen anything like this, ever,” he said.
As seen in the “Recession Probability” section, the average response as to whether the economy will be in a recession within the next 12 months was 12.53%. The individual estimates, of those who responded, ranged from 0% to 100%. For reference, the average response in March’s survey was 11.62%.
As stated in the article, the survey’s 69 respondents were academic, financial and business economists. The survey was conducted April 5 – April 7. Not every economist answered every question.
The current average forecasts among economists polled include the following:
full-year 2021: 6.41%
full-year 2022: 3.21%
full-year 2023: 2.39%
December 2021: 4.83%
December 2022: 4.10%
December 2023: 3.80%
10-Year Treasury Yield:
December 2021: 1.93%
December 2022: 2.22%
December 2023: 2.50%
December 2021: 2.58%
December 2022: 2.27%
December 2023: 2.34%
full-year 2021: 2.08%
full-year 2022: 2.13%
full-year 2023: 2.22%
(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 4118.95 as this post is written