Saturday, November 21, 2009

U.S. GDP Forecast update

Here are my latest forecasts. As a reminder, my model uses only cold hard statistical data. There are no assumptions made here, except for the one that past relationships between leading indicators of the economy and GDP will continue to hold.

One-time unexpected short-term fiscal effects, such as the Cash for Clunkers program, may thus not be captured, and I won't try to make up for it by artificially boosting my model's forecasts. The public demand component is accounted for through other variables, and I do expect my model to capture most of it over the medium-run.

GDP Forecasts:

Next 12 months: 1.5% growth
Q4 2009: 1.1%
Q1 2010: 0.8%
Q2 2010: 1.0%
Q3 2010: -1.3%
Q4 2010: -2.1% (as always, this last one is to be taken with a grain of salt as my model is not made to make forecasts more than 12 months out).

Below is a graph of my monthly GDP forecasts (annualized), along with the 50%, 75% and 90% confidence bands (click to enlarge):


  1. Your graph on economic outlook, looks like my projection of the general stock market. I agree
    with you that most investors still think there is a little punch left in the bowl, me included
    until this last weekend. I got a reality check,
    and hopefully I can avoid some of the pain I got to experience last year at this time. I will check in on your blogs from time to time,
    you seem to have no "Agenda", and use clean information.


  2. you posted on Benzinga
    let's talk. email us. i don't see an email for you on here. nice write-up!