April 2017 WSJ Forecast Report

The WSJ Forecasts are out for April and we can observe forecasts staying steady with a few exceptions. Most notably 2018Q1 GDP forecasts fell by almost one half a percent over the last month:

While one might immediately think the recent jobs report might have something to do with it, I suspect this is not the case. First, while the reported number was quite low and January and February revisions combined to 50,000 fewer jobs over those months, the 3 month average for Q1 was still about 200,000. ​Second, the other forecast of GDP growth were more or less unchanged, signaling that, according to the consensus forecasts, underlying fundamentals have not changed much. While the expectation is still for robust growth in the first quarter the reversal in the trend of expectations is a bit surprising.

Despite a bit of a reversal in Q1 GDP growth, most other indicators have remained consistent with pst forecasts. If anything long run unemployment expectations grew stronger with the end of 2020 expectations dropping a tenth of a percent. This makes the consensus forecast of unemployment for the coming two years less than 4 percent. Inflation expectations over all horizons rose moderately, and the recent Federal Reserve policy actions and statements have just confirmed our professional forecasts. 

The only signs of major changes came in crude oil prices expectations, which jumped by a dollar or more after 2018. In addition the recession probability forecast rose 1.67 percent to a little over 15 percent. All in all, the recent data has not moved forecasts drastically.