Attached are three charts that highlight the current consensus forecast for US GDP growth in 2010 and 2011. The consensus has been established from 53 individual forecast; all of which were updated in July 2010.
The median forecast is currently expecting US GDP to grow by 3.1% in 2010, but then slow to 2.9% in 2011. This compares with a decline of 2.4% in 2009 and an average growth rate of 2.9% since 1980 (the average growth rate is not that same as the trend growth rate). The highest estimate of the 53 analysts surveyed anticipates growth of 4.3% in 2010 and a spectacular 6.0% in 2011, while the lowest is looking for only 1.8% in 2010 and 1.7% in 2011. STANLIB is currently forecasting growth of 3.2% in 2010, but then slowing to 2.7% in 2011, which is slightly below the median.
Out of interest, the IMF’s latest forecast (July 2010) projects US GDP growth at 3.3% in 2010 and 2.9% in 2011, and the IIF expects 3.3% in 2010 and 2.7%, although their latest comment (out yesterday) highlights that there are “tinges of apprehension about signs of a downshift in growth”.
Does this mean that no-one is expecting a double-dip recession in the US. I guess this partly depends on your definition of a double dip recession, and unfortunately there are numerous versions available. However, looking at the quarterly growth estimates of the 53 analysts surveyed, only one expects the US to experience a return to negative GDP (see chart attached) in any quarter over the next 18 months. There are also some high profile analysts warning about a double-dip recession. These would include Nouriel Roubini, Arthur Laffer, John Maulden etc. In this regard Paul Krugman’s (probably the smartest economist in the world) 27 June column in the New York Times that warns about fiscal policy mistakes, is worth reading.
While the consensus or majority of analysts/institutions are currently not forecasting a double-dip recession in the US, the is little doubt that the risk of a double-dip has increased, (see our latest ‘flight path’ chart) especially if the fiscal austerity programmes are made more and more effective.
We will continue to monitor the situation very closely.
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