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Forecasting Q2 GDP Number

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    July 27, 2012

    Tomorrow morning we get the Advance Estimate for Q2 GDP from the Bureau of Economic Analysis. Earlier this months I reported on the GDP forecasts in Wall Street Journal’s July survey of economists (available here). Their estimates ranged from a low of 0.7 percent to a high of 2.5 percent. The average of the 50 responses was 1.7 and the median (middle) response was 1.8 percent. The WSJ survey was conducted July 6-10, which predates a bit of the more recent eurozone turmoil in the news.

    The forecast I routinely follow is the consensus at Briefing.com, which is 1.2 percent. Briefing.com’s own forecast is a more pessimistic 0.4 percent.

    Earlier today, an article on the International Business Times website has the intriguing title In Advance Of Q2 US GDP Release, Forecasting Economists Race To The Bottom. The article points out that Bloomberg’s survey of 80 economists has a median forecast of 1.4 percent and that the 74 economists surveyed by Thompson Reuters produced a median of 1.5 percent.

    The most striking news in the IB Times article is the documentation of the series of lowered forecasts by Goldman Sachs, cleverly illustrated with this chart.

    Here’s a reminder of the Federal Reserve’s GDP projections, which are annual forecasts only. The most recent Federal Reserve economic projections date from June 20th, which are available here. But to save you the click, here is a snapshot of the GDP data.


    As I pointed out in my report on the recent WSJ survey, the July 27th Advance Estimate for Q2 GDP will have more at stake than the just Q2 GDP. We get the annual revision wild card, which could bring adjustments to the past 13 quarters.


    The annual revision of the national income and product accounts (NIPAs), covering the first quarter of 2009 through the first quarter of 2012, will be released along with the “advance” estimate of GDP for the second quarter of 2012 on July 27, 2012.


    Annual revisions have produced some rather remarkable changes (more here). Could we see surprises of similar magnitude tomorrow?


    Tomorrow I’ll post multiple reviews of the latest GDP.


    Images: Flickr (licence attribution)

    About The Author

    My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I’m a formerly retired first wave boomer with a Ph.D. in English from Duke. Now my website has been acquired byAdvisor Perspectives, where I have been appointed the Vice President of Research.

    My first career was a faculty position at North Carolina State University, where I achieved the rank of Full Professor in 1983. During the early ’80s I got hooked on academic uses of microcomputers for research and instruction. In 1983, I co-directed the Sixth International Conference on Computers and the Humanities. An IBM executive who attended the conference made me a job offer I couldn’t refuse.

    Thus began my new career as a Higher Education Consultant for IBM — an ambassador for Information Technology to major universities around the country. After 12 years with Big Blue, I grew tired of the constant travel and left for a series of IT management positions in the Research Triangle area of North Carolina. I concluded my IT career managing the group responsible for email and research databases at GlaxoSmithKline until my retirement in 2006.

    Contrary to what many visitors assume based on my last name, I’m not a bearish short seller. It’s true that some of my content has been a bit pessimistic in recent years. But I believe this is a result of economic realities and not a personal bias. For the record, my efforts to educate others about bear markets date from November 2007, as this Motley Fool article attests.