The survey shows, among many measures, the following median expectations:
Real GDP: (annual average level)
full-year 2020: 2.0%
full-year 2021: 2.0%
full-year 2022: 2.0%
full-year 2023: 2.0%
Unemployment Rate: (annual average level)
for 2020: 3.6%
for 2021: 3.6%
for 2022: 3.7%
for 2023: 3.9%
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Regarding the risk of a negative quarter in real GDP in any of the next few quarters, mean estimates are 12.5%, 14.9%, 18.4%, 21.3%, and 25.7% for each of the quarters from Q1 2020 through Q1 2021, respectively.
As well, there are also a variety of time frames shown (present quarter through the year 2029) with the median expected inflation (annualized) of each. Inflation is measured in Headline and Core CPI and Headline and Core PCE. Over all time frames expectations are shown to be in the 1.7% to 2.3% range.
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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 agree with many of the consensus estimates and much of the commentary in these forecast surveys.
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The Special Note summarizes my overall thoughts about our economic situation
For a variety of reasons, I am not as enamored with ECRI’s WLI and WLI Growth measures as many are.
However, I do think the measures are important and deserve close monitoring and scrutiny.
Below are three long-term charts, from the Doug Short site’s ECRI update post of February 14, 2020 titled “ECRI Weekly Leading Index Update.” These charts are on a weekly basis through the February 14, 2020 release, indicating data through February 7, 2020.
This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:
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This last chart depicts, on a long-term basis, the WLI, Gr.:
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I post various economic indicators and indices because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.
_____
The Special Note summarizes my overall thoughts about our economic situation
I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.
An excerpt:
Some 35% of economists expect the next recession will start in 2021, up from 30.9% last month’s survey, while 29.7% expect one to start in 2022. Just 10.8% see a recession starting this year.
As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 25.6%. The individual estimates, of those who responded, ranged from 0% to 67%. For reference, the average response in January’s survey was 23.97%.
As stated in the article, the survey’s 63 respondents were academic, financial and business economists. Not every economist answered every question. The survey was conducted February 7 – February 11, 2020.
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Economic Forecasts
The current average forecasts among economists polled include the following:
GDP:
full-year 2020: 1.88%
full-year 2021: 1.94%
full-year 2022: 1.91%
Unemployment Rate:
December 2020: 3.60%
December 2021: 3.81%
December 2022: 4.01%
10-Year Treasury Yield:
December 2020: 1.98%
December 2021: 2.20%
December 2022: 2.44%
CPI:
December 2020: 1.92%
December 2021: 2.15%
December 2022: 2.20%
Crude Oil ($ per bbl):
for 12/31/2020: $54.75
for 12/31/2021: $56.00
for 12/31/2022: $56.02
(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” label)
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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
Throughout this site there are many discussions of economic indicators. At this time, the readings of various indicators are especially notable. This post is the latest in a series of posts indicating U.S. economic weakness or a notably low growth rate.
While many U.S. economic indicators – including GDP – are indicating economic growth, others depict (or imply) various degrees of weak growth or economic contraction. As seen in the January 2020 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for 2.3% GDP growth in 2019 and 1.9% GDP growth in 2020. However, there are other broad-based economic indicators that seem to imply a weaker growth rate.
As well, it should be remembered that GDP figures can be (substantially) revised.
Charts Indicating U.S. Economic Weakness
Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:
Total Federal Receipts
“Total Federal Receipts” growth continues to be intermittent in nature since 2015. As well, the level of growth does not seem congruent to the (recent) levels of economic growth as seen in aggregate measures such as Real GDP.
“Total Federal Receipts” through January had a last monthly value of $372,288 Million. Shown below is the measure displayed on a “Percent Change From Year Ago” basis with value 9.5%, last updated February 12, 2020:
source: U.S. Department of the Treasury. Fiscal Service, Total Federal Receipts [MTSR133FMS], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed February 12, 2020: https://fred.stlouisfed.org/series/MTSR133FMS
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The Chicago Fed National Activity Index (CFNAI)
A broad-based economic indicator that has been implying weaker growth or mild contraction is the Chicago Fed National Activity Index (CFNAI).
source: Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, January 22, 2020; https://fred.stlouisfed.org/series/CFNAI
The CFNAI-MA3, with current reading of -.23:
source: Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis, January 22, 2020; https://fred.stlouisfed.org/series/CFNAIMA3
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The Yield Curve
Many people believe that the Yield Curve is a leading economic indicator for the United States economy.
While I continue to have the stated reservations regarding the “Yield Curve” as an indicator, I do believe that it should be monitored.
Various portions of the U.S. Yield Curve have been showing intermittent or prolonged inversions. Below is the spread between 10-Year Treasury Constant Maturity and the 3-Month Treasury Constant Maturity from 1982 through the February 11, 2020 value, showing a value of .02 (10-Year Treasury Yield (FRED DGS10) of 1.56% , 3-Month Treasury Yield (FRED DGS3MO) of 1.58%):
source: Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity [T10Y3M], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed February 12, 2020: https://fred.stlouisfed.org/series/T10Y3M
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Loan Demand And Related Measures
As seen in previous updates, various aspects of lending growth and related measures have shown a contraction. Shown below is a measure, Net Percentage of Domestic Banks Reporting Stronger Demand for Commercial and Industrial Loans from Large and Middle-Market Firms [DRSDCILM], that shows a decline. The current value is -11.1% as of the February 3, 2020 quarterly update:
source: Board of Governors of the Federal Reserve System (US), Net Percentage of Domestic Banks Reporting Stronger Demand for Commercial and Industrial Loans from Large and Middle-Market Firms [DRSDCILM], retrieved from FRED, Federal Reserve Bank of St. Louis; accesssed February 12, 2020: https://fred.stlouisfed.org/series/DRSDCILM
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Job Openings
Job openings, (Job Openings: Total Nonfarm [JTSJOL]) although still at a high level, have recently declined significantly. This Job Openings measure had a value of 6423 (Thousands) through December, as of the February 11, 2020 update, as shown below:
Shown below is this measure displayed on a “Percent Change From Year Ago” basis with value -14.1%:
source: U.S. Bureau of Labor Statistics, Job Openings: Total Nonfarm [JTSJOL], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed February 12, 2020: https://fred.stlouisfed.org/series/JTSJOL
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Other Indicators
As mentioned previously, many other indicators discussed on this site indicate weak economic growth or economic contraction, if not outright (gravely) problematical economic conditions.
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The Special Note summarizes my overall thoughts about our economic situation
The St. Louis Fed’s Financial Stress Index (STLFSI) is one index that is supposed to measure stress in the financial system. Its reading as of the February 6, 2020 update (reflecting data through January 31, 2020) is -1.463.
Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.
Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).
Here are summary descriptions of each, as seen in FRED:
The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.
The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.
For further information, please visit the Federal Reserve Bank of Chicago’s web site:
Below are the most recently updated charts of the NFCI and ANFCI, respectively.
The NFCI chart below was last updated on February 12, 2020 incorporating data from January 8, 1971 through February 7, 2020, on a weekly basis. The February 7 value is -.81:
The ANFCI chart below was last updated on February 12, 2020 incorporating data from January 8, 1971 through February 7, 2020, on a weekly basis. The February 7 value is -.67:
I post various indicators and indices because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.
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The Special Note summarizes my overall thoughts about our economic situation
There are a variety of economic models that are supposed to predict the probabilities of recession.
While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
Please note that each of these models is updated regularly, and the results of these – as well as other recession models – can fluctuate significantly.
Currently (last updated February 4, 2020 using data through January 2020) this “Yield Curve” model shows a 25.2037% probability of a recession in the United States twelve months ahead. For comparison purposes, it showed a 23.6237% probability through December 2019, and a chart going back to 1960 is seen at the “Probability Of U.S. Recession Predicted by Treasury Spread.” (pdf)
Smoothed recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. This model was originally developed in Chauvet, M., “An Economic Characterization of Business Cycle Dynamics with Factor Structure and Regime Switching,” International Economic Review, 1998, 39, 969-996. (http://faculty.ucr.edu/~chauvet/ier.pdf)
This model, last updated on February 3, 2020 currently shows a 2.06% probability using data through December 2019.
Here is the FRED chart (last updated February 3, 2020):
Data Source: Piger, Jeremy Max and Chauvet, Marcelle, Smoothed U.S. Recession Probabilities [RECPROUSM156N], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed February 10, 2020: http://research.stlouisfed.org/fred2/series/RECPROUSM156N
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The two models featured above can be compared against measures seen in recent posts. For instance, as seen in the January 16, 2020 post titled “The January 2020 Wall Street Journal Economic Forecast Survey“ economists surveyed averaged a 23.97% probability of a U.S. recession within the next 12 months.
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The Special Note summarizes my overall thoughts about our economic situation
For reference purposes, below are five charts that display growth in payroll employment, as depicted by the Total Nonfarm Payroll measures (FRED data series PAYEMS).
PAYEMS, which is seasonally adjusted, is defined in Financial Reserve Economic Data [FRED] as:
All Employees: Total Nonfarm, commonly known as Total Nonfarm Payroll, is a measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product (GDP).
This measure provides useful insights into the current economic situation because it can represent the number of jobs added or lost in an economy. Increases in employment might indicate that businesses are hiring which might also suggest that businesses are growing. Additionally, those who are newly employed have increased their personal incomes, which means (all else constant) their disposable incomes have also increased, thus fostering further economic expansion.
Generally, the U.S. labor force and levels of employment and unemployment are subject to fluctuations due to seasonal changes in weather, major holidays, and the opening and closing of schools. The Bureau of Labor Statistics (BLS) adjusts the data to offset the seasonal effects to show non-seasonal changes: for example, women’s participation in the labor force; or a general decline in the number of employees, a possible indication of a downturn in the economy. To closely examine seasonal and non-seasonal changes, the BLS releases two monthly statistical measures: the seasonally adjusted All Employees: Total Nonfarm (PAYEMS) and All Employees: Total Nonfarm (PAYNSA), which is not seasonally adjusted.
The series comes from the ‘Current Employment Statistics (Establishment Survey).’
The source code is: CES0000000001
The first chart shows the monthly change in Total Nonfarm Payroll from the year 2000 through the current January 2020 report (January 2020 value of 225 (Thousands)):
(click on charts to enlarge images)
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: All Employees: Total Nonfarm [PAYEMS] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed February 7, 2020; https://fred.stlouisfed.org/series/PAYEMS
The second chart shows a longer-term chart of the same month-over-month change in Total Nonfarm Payroll (reports of February 1939 through the present report of January 2020):
The third chart shows the aggregate number of Total Nonfarm Payroll, from the reports of February 1939 – January 2020 (January 2020 value of 152.186 million):
The fourth chart shows this same aggregate number of Total Nonfarm Payroll measure as seen above but presented on a LOG scale:
Lastly, the fifth chart shows the Total Nonfarm Payroll number on a “Percent Change from Year Ago” basis from January 1940 – January 2020: (January 2020 value of 1.4%)
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I post various indicators and indices because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.
_____
The Special Note summarizes my overall thoughts about our economic situation
![Net Percentage of Domestic Banks Reporting Stronger Demand for Commercial and Industrial Loans from Large and Middle-Market Firms [DRSDCILM]](https://www.economicgreenfield.com/wp-content/uploads/2020/02/DRSDCILM_2-3-20-11.1-Percent.png)
![Job Openings: Total Nonfarm [JTSJOL] Percent Change From Year Ago](https://www.economicgreenfield.com/wp-content/uploads/2020/02/JTSJOL_2-11-20-6423-14.1-Percent-Change-From-Year-Ago.png)
