Monday, January 29, 2007

My Q4 GDP forecast: 2.75%

GDP growth has never been more difficult to forecast than for Q4. Because of the impact of the housing pullback coupled with some apparent economic strength and volatile inflation and plenty of other mixed signals, it's anybody's guess. My own forecast (guess) is that annualized real GDP growth for Q4 will come in around 2.75%.

I am trying to be as conservative as I can muster, but always striving to be as realistic as possible as well.

Sure, because of the crazy accounting used to calculate and estimate GDP, the actual number could come in as low as 0.50% or as high as 3.50%. I doubt it will be that low or that high, but it is possible.

I would offer a tighter estimated range of +1.25% to 3.25%, with a midpoint of 2.25%. My gut feel is that the economy really was a lot stronger than many analysts and commentaters were willing to let on. I am inclined to go with a higher tighter range of 2.25% to 3.25% with a midpoint of 2.75%.

So, that is my final forecast for Q4 real GDP growth which will be reported at 8:30 a.m. ET on Wednesday, January 31, 2007:

Annualized real GDP growth for Q4 will be in the range 2.25% to 3.25% with a midpoint of 2.75%.

Note: the report on Wednesday is the advanced estimate and will be followed in a month with the preliminary estimate, to be followed in yet another month with the final estimate. The data needed to properly calculate GDP for Q4 simply isn't all known in final form yet. We have to wait two more months to get that final answer.

-- Jack Krupansky


At 10:28 AM EST , Anonymous Jack Krupansky said...


The headline number came in at 3.5% growth vs. my 2.75% forecast.

The economy was even stronger than *I* thought!

But I did try to be as conservative as I could.

-- Jack Krupansky


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