The CBO has chimed in with its growth revision for 2011 (and 2012 and 2013):
CBO expects that the recovery will continue but that real (inflation-adjusted) GDP will stay well below the economy’s potential—a level that corresponds to a high rate of use of labor and capital—for several years. On the basis of economic data available through early July, when the agency initially completed its economic forecast, CBO projects that real GDP will increase by 2.3 percent this year and by 2.7 percent next year. Under current law, federal tax and spending policies will impose substantial restraint on the economy in 2013, so CBO projects that economic growth will slow that year before picking up again, averaging 3.6 percent per year from 2013 through 2016.
With modest economic growth anticipated for the next few years, CBO expects employment to expand slowly. The unemployment rate is projected to fall from 9.1 percent in the second quarter of 2011 to 8.9 percent in the fourth quarter of the year and to 8.5 percent in the fourth quarter of 2012—and then to remain above 8 percent until 2014. Although inflation increased in the first half of 2011, spurred largely by a sharp rise in oil prices, CBO projects that it will diminish in the second half of the year and then stay below 2.0 percent over the next several years.
At this point by my reckoning Goldman Sachs, Morgan Stanley, Macroeconomic Advisors, and any number of other banks, research firms, and independent financial advisors have decreased their estimates for 2011 growth over the last few weeks.
Perhaps I should start a pool.
- When will the Federal Reserve produce its next, decreased growth estimate? IIRC its last decreased growth estimate was about two months ago.
- When will the next round of decreased estimates begin?
- When will the NBER announce a recession and when will they say it began?
1) It will be whenever their next scheduled ‘formal’ announcement on such matters takes place.
2) Assumes that this round of decreased estimates has stopped.
3) Sometime in the first three months of next year NBER will announce that a recession began in April or May this year. They will blame it on the Japanese earthquake and related disasters.
“CBO Chimes In: Growth Slower Than Previously Estimated”
I’ve got the answer:
Let’s shut down coal fired power plants and squeeze manufacturers ballxs on energy costs.
Let’s let Obama-buddy Jeff Immelt make planes in China.
Let’s let ObamaCare crush small business P&L’s.
Let’s tell every small businessman in the country – you invest and make a profit, we’ll hunt your smelly ass down and take half. You invest and lose…….tough luck.
I know, let’s put together a blue ribbon panel of lawyers and politicians to dictate answers……….
Right now I wouldn’t be surprised if we went back into recession. In chained dollars, PCE has been negative the last 3 months. If August is negative and 2nd quarter GDP is revised into negative territory then I think we’d be safe betting that the 3rd quarter will be negative as well for GDP. That is the old definition of a recession. Add on that unemployment has started increasing again and that the payroll survey for the last few months have been looking like the last few months of 2007 in terms of jobs added (i.e. right before the recession) I think there is a good chance of a recession.
Yeah April or May, maybe June. It isn’t a given, But we are heading in that direction, IMO.