WSJ Economists' GDP Forecasts: 1.7 in Q3 and 1.8 in Q4
October 22, 2012
by Doug Short
The big economic announcement this week will be the Friday Advance Estimate for Q3 GDP from the Bureau of Economic Analysis. The final number for Q2 GDP was 1.3%. The general consensus is that Q3 will show an improvement in this broad measure of the economy. Forexpros weighs in at 1.8%. According to Briefing.com, the consensus for Q3 is 1.9%. Briefing.com's own estimate, I should point out, is considerably lower at 0.9%.
The substantial spread between the Briefing.com consensus and its own estimate prompts an obvious question. What is the distribution of opinions among economists on this benchmark metric? Is the range wide or narrow? Let's review the data in the Wall Street Journal's October survey of economists, conducted October 7-11, which is available in Excel format here. Forty-eight of the 51 economists solicited in the survey responded. The chart below arranges their Q3 GDP forecasts horizontally from low-to-high to give us a visualization of the distribution of responses and any outliers.
As the chart suggests, the majority of professionals fall into a fairly narrow range around the 1.7 mean (average). Actually, at three decimal places the mean is 1.748 -- higher than the 1.7 median (middle) estimate and just hair below 1.8 when the conventional rounding of GDP to one decimal place is applied. The standard deviation of the complete range of estimates is 0.33. Interestingly enough the mode (most frequent estimate) was a tie between 1.5 and 2.0, which means the two modes straddle the mean.
Looking Ahead to Q4
What do the economists see for Q4? We won't get the Advance Estimate from the BEA until late January. But the WSJ survey participants have weighed in. Their Q4 median and mean estimates are fractionally higher than for Q3, but the range, as we might expect for a gaze further into the future, is wider. The standard deviation is 0.53. There is one rather amazing outlier at the top. If we exclude the cockeyed optimist (allusion to South Pacific), the standard deviation drops to 0.42. As with the Q3 estimates, there are two modes, but they are both on the low side of the mean.
I'm posting this at 8:30 AM EST. In 96 hours we'll be able to determine how close the WSJ consensus on GDP is to the BEA's Advance Estimate.