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Is the Administration's GDP Forecast Too Rosy?
Econbrowser —
... off the top 5 and bottom 5 forecasts from the 52 respondents for the February survey regarding 2009 y/y growth). In other words, this graph confirms the WaPo conclusion:
...while upbeat, the administration's forecasts are within the range of reasonable possibilities, according to economists we consulted.
Some discussion of where the Administration's forecast relates to CBO's is here. Dr. Romer provides additional insight here. I reproduce a graph from that discussion below:
Figure 1 ...
The CEA on Its Forecast
Greg Mankiw's Blog —
The Council of Economic Advisers has put out an analysis of the administration forecast.
Team Obama on the Unit Root Hypothesis
Greg Mankiw's Blog —
All academics, to some degree, suffer from the infliction of seeing the world through the lens of their own research. I admit, I do it too. So when I read the CEA's forecast analysis, this sentence jumped out at me: ...
Rebound on the Way... I Mean It... Any Year Now... And It Will Be HUGE
EconomPic —
The Council of Economic Advistors via Whitehouse.gov responds to criticism of their "rosy" projections in the Administration's budget for economic growth: ...
Lower Growth Now, Higher Growth Later
Toro's Running of the Bulls Market Blog —
An intriguing graph from Brad DeLong.
In other words, slower or negative economic growth and higher unemployment now leads to faster growth later. The CEA also notes that the deeper the recession, the greater the recovery.
However, the analysis does not include pre-WWII data. The causes of our current decline is most similar to the 1930s. But even including the 1930s, American growth does snap back to trend.
...
CNBC: US Economy Could Recover Much Sooner than Expected
Fund My Mutual Fund —
... Macroeconomic Advisers, whose economist forecast for 2010 is more optimistic than that of the White House, estimates the government fiscal stimulus package will add 2 percent to GDP in the second quarter, one reason why the firm expects the economy to shrink by only 0.5 percent during the period. (this is part of the "paper prosperity" I speak of, similar to how the Bush rebate checks created an illusion of "things were not as bad as the bears said" because aggregrate economic data didn't show it) ...
Ready, Shoot, Aim
Econbrowser —
... Troika of the Council of Economic Advisers (CEA), the Treasury and the Office of Management and Budget (OMB). These forecasts in turn form the basis for official budget numbers, and projections for agencies throughout the U.S. government. Because so many things depend upon these forecasts, everybody has to agree on the information set to be used (so you will see that the forecasts come with caveats indicating that the predictions are based upon data available at a certain date). From Economic Projections and the Budget Outlook (Feb. 28): ...
Back to the Stimulus Debate: W, Timing, the States, and Baselines
Econbrowser —
... chastises the Administration for using models that were too optimistic. I certainly agree in retrospect the Administration's baseline forecast was too optimistic. Two observations: First, it's important to realize that the end-February assessments were based upon early January forecasts completed by the previous (Bush) Administration, and finalized on February 3 [7]. When taken in that light, I don't believe the forecasts were that much out of line with private sector forecasts ...
