I could join the American Economic Association (AEA) but find them to be too academic and detached. Instead, I belong to the National Association of Business Economists (NABE), where the everyday work of members depends on their knowledge of economics. Their latest survey of members was just released and is briefly discussed.below. The latest survey of the AEA is not.
Following the unexpectedly lousy first quarter, when GDP shrank a whopping 2.9%, most NABE economists have reduced their full year forecast from 3.5% growth to only 3.0%. This is reasonable.
Full Year 2014 export growth was reduced from 3.0% to 2.5%. (It was estimated at a whopping 5.5% as recently as March.) This is a big drop but is reasonable.
Only 8% of NABE economists think there is even a 25% probability of recession this year or in 2015. Over 60% think there is less than a 10% probability. This is reasonable.
Over half believe the Fed will begin tightening in the first half of 2015, with the majority thinking it will begin in the second quarter. I'm in general agreement with these survey results except for this one. I don't expect monetary tightening by the Fed until late next year, probably Q4. When tightening begins, two bad things start to happen. One, the budget deficit gets worse because the Federal government must pay increased interest expense on the almost $18 trillion of debt. Two, inflation gets constrained by money tightening, and we need inflation to help make the national debt more manageable. So, why would you invite this trouble before absolutely necessary?
Following the unexpectedly lousy first quarter, when GDP shrank a whopping 2.9%, most NABE economists have reduced their full year forecast from 3.5% growth to only 3.0%. This is reasonable.
Full Year 2014 export growth was reduced from 3.0% to 2.5%. (It was estimated at a whopping 5.5% as recently as March.) This is a big drop but is reasonable.
Only 8% of NABE economists think there is even a 25% probability of recession this year or in 2015. Over 60% think there is less than a 10% probability. This is reasonable.
Over half believe the Fed will begin tightening in the first half of 2015, with the majority thinking it will begin in the second quarter. I'm in general agreement with these survey results except for this one. I don't expect monetary tightening by the Fed until late next year, probably Q4. When tightening begins, two bad things start to happen. One, the budget deficit gets worse because the Federal government must pay increased interest expense on the almost $18 trillion of debt. Two, inflation gets constrained by money tightening, and we need inflation to help make the national debt more manageable. So, why would you invite this trouble before absolutely necessary?
