538 survey of macroeconomists

The 538 webpage, part of ABC news and originally set up by Nate Silver, has just done a survey of academic macroeconomic forecasters about the coronavirus recession. Allan Timmermann at UC San Diego and I helped them with this and the results were released this afternoon.

The results point to a deep recession with a very slow recovery. The median prediction for real GDP growth in the second quarter is negative 34 percentage points at an annualized rate. Respondents see (on average) a 32 percent chance that real GDP will not have recovered to its 2019Q4 level by the end of 2022. And this is only asking when the level of real GDP returns to that in 2019Q4, not when real GDP returns to its old trendline.

I hope that the 538 survey adds some value over and above survey of Wall Street economists, like the Survey of Professional Forecasters (SPF) run by the Philadelphia Fed. The questions are a bit different and the people being surveyed are academics. The 538 survey was taken last weekend, not very long after the most recent SPF survey. Where questions are comparable, the answers from the 538 survey and the SPF are mostly very similar. But the academics maybe see an even slower recovery. The SPF sees the unemployment rate falling back into single digits in the first quarter of next year; the academic panel put 61 percent odds on this milestone being crossed later. The SPF does not ask about the timing or direction of the next change in the federal funds target, but the 538 survey puts 12 percent odds on the next change being a decrease. This is something that the Fed has made clear is a truly last resort. The 538 survey assigns 23 percent chance to the next change being an increase but in 2024 or later.

The survey will continue to be run every other week, and so will allow people to see how news on fiscal policy, monetary policy, lockdown measures, and most importantly the virus itself affect macroeconomists’ expectations.