Recession Tales from the WSJ January Survey?
Right here’s the outlook for GDP:
Determine 1: GDP (black), WSJ imply January 2023 survey (blue), October 2022 (chartreuse), GDPNow 1/10/23 (pink sq.). Supply: BEA 2022Q3 third rel, WSJ (numerous), Atlanta Fed.
During the last three months, GDP rose greater than anticipated in Q3, and progress projections for This autumn accelerated. The imply of forecasts made between January 6-10 is exceeded by GDPNow of January tenth. That being mentioned, there’s a extensive dispersion of forecasts.
Determine 2: GDP (black), WSJ imply January 2023 survey (blue), median (pink), 20% trimmed excessive for 2023 this fall/this fall – Fienup, Hamilton California Lutheran College (tan), low – Faucher/PNC Monetary Companies Group (sky blue). Supply: BEA 2022Q3 third rel, WSJ January survey.
A recession doesn’t present up within the imply forecast, and 1 / 4 of damaging progress reveals up within the median. In fact, as mentioned on quite a lot of events, two consecutive quarteres of damaging GDP progress will not be the identical as a recession.
The WSJ surveyed recession possibilities. Beneath is a time collection.
Determine 3: Chance of recession inside subsequent 12 months, from WSJ January 2023 survey (blue), and . chance of recession in 12 months from probit on 10yr-3mo unfold (purple). NBER outlined peak-to-trough recession dates shaded grey. Supply: WSJ (January), NBER, and creator’s calculations.
For comparability, I’ve included the anticipated recession chance for 12 months forward from a probit (notice the distinction from the WSJ survey, which asks for recession inside 12 months. (Extra within the article.)
