Macroeconomic Advisers forecasts Q4 GDP at +2.9%, Q1 at +4.0%
As of Thursday, January 20, 2011, Macroeconomic Advisers (MA), the group which provides the data on monthly GDP used by the National Bureau of Economic Research (NBER) Business Cycle Dating Committee (BCDC), is forecasting that annualized real GDP growth for Q4 will come in at +2.9% and +4.0% for Q1. That Q4 number is still only near the low end of minimally acceptable economic growth for a healthy economy. Nonetheless, the economy is still growing and recovering from the financial crisis and recession of 2008. Meanwhile, a Bloomberg survey of economists pegs Q4 GDP growth at +3.5%. I would note that GDP gets reported over a three month period with two revisions which can vary significantly, so it actually isn't clear whether people are necessarily referring to the initial estimate due this coming week or the final report due in March. I would also note that the MA forecast is usually fairly close to the next official report. So, maybe Q4 will initially be reported at +2.9% this coming week and then revised up to +3.5% or so in March.
Those "hoping" for a double-dip recession will continue to be disappointed.
Last month former Federal Reserve Chairman Alan Greenspan rubbed salt into the wounds of the double-dippers by telling Bloomberg that "The U.S. economy unquestionably has some momentum. The fourth quarter looks good. The growth rate could be 3.5 percent or more" for the final quarter of this year." Greenspan also told Bloomberg that he expected GDP growth of 3% to 3.5% in 2011.
The economic recovery from the recession trough of June 2009 is now 19 months old, slightly longer than the duration of the recession itself.
Real GDP is roughly back up to the level it was in November 2007, just before the recession began. This is still about 1% below the GDP peak in January of 2008.
Despite the progress of the recovery, we still have a long way to go to get to full health with most of the 8 million workers who lost their jobs in the recession still looking for work. I continue to refer to this as a "mini-depression" even though the recession itself is long over. It could be five to ten years before all of those workers have returned to productive participation in the economy.
It is also worth noting that a significant portion of the recovery is somewhat artificial and the result of temporary government "stimulus", so it may take a couple more years before the recovery is truly "real."