Source: IGM-FT December survey
.
Economic crisis likely, modal action 2023Q1 or Q2. Average forecast q4/q4 2023 growth 1% (Survey responses here; feet post here):.
Figure 2: Three month Treasury yield (black), forecasted (teal), 10 years Treasury yield (dark red), forecasted (pink), all in %. Light shading represents start of recession– modal reaction from IGM-FT survey. Source: Treasury through FRED, Philadelphia Fed, IGM-FT December study, and authors computations.
The SPF projection consists of a forecast of the 10yr Treasury. The implied SPF projection is for a 10yr-3mo spread of -0.09% in 2022Q4 (As of the first 2 months of Q4, is -0.03%). The figure reveals an anticipated 5 quarter inversion, which is extremely long; the inversion prior to the 2007 economic downturn was only 3 quarters, that before the 2001 economic crisis was less than 2 quarters.
Source: IGM-FT December survey.
The modal reactions show a peak at 2023Q2, and drop in either 2023Q4 or 2024Q1. The SPF doesnt poll on the Fed funds rate, however does poll on the three month Treasury yield which tracks the motions in the Fed funds rate relatively well. Broadly speaking, the SPF mean is constant with the IGM-FT modal action concerning this rate.
Figure 1: Reported GDP (black), Atlanta Fed 12/6 nowcast (pink square), IGM-FT mean forecast GDP level, based on Atlanta Fed nowcast (sky blue inverted triangle), 10th/90th percentile (blue gray +), and median Survey of Professional Forecasters level (dark blue), all in bn.Ch.2012$ SAAR, log scale. Light shading signifies start of economic downturn– modal action from IGM-FT study. Source: BEA 2022Q3 2nd release, Philadelphia Fed, Atlanta Fed (12/6), IGM-FT December survey, and authors computations.
Light shading signifies start of economic crisis– modal response from IGM-FT study.
Source: IGM-FT December study.
The Survey of Professional Forecasters (November 2022 release) does not poll on economic crisis start, however places a high possibility of unfavorable GDP development in 2023Q2 (49.4%) and a little lower in 2023Q1 (47.2%), and yet less in 2023Q3 (46.1%).
When will the Fed funds rates peak, and after that be dropped? Those are questions 7 and 8:.
Figure 1: Reported GDP (black), Atlanta Fed 12/6 nowcast (pink square), IGM-FT typical projection GDP level, based upon Atlanta Fed nowcast (sky blue inverted triangle), 10th/90th percentile (blue gray +), and average Survey of Professional Forecasters level (dark blue), all in bn.Ch.2012$ SAAR, log scale. Light shading signifies start of economic downturn– modal response from IGM-FT survey. Source: BEA 2022Q3 2nd release, Philadelphia Fed, Atlanta Fed (12/6), IGM-FT December survey, and authors estimations.
Its tough to see the predicted economic crisis reveal up in the time series, but heres the IGM-FT study reaction, revealing 48% of participants suggesting 2023Q1 or Q2 as most likely economic downturn start (note– as figured out by NBER, not by the casual 2-quarter-rule).
