Academic journal article The Journal of Business Forecasting Methods & Systems
Consensus Forecasts of Financial Institutions
The Spring Survey of financial forecasters expects economic activity to move upward. Real GDP growth is in line with long-term historical trends. Look for gains in retail spending. We have seen the lows in interest rates. Fed. easing should continue. The inflation outlook remains good. Through the next four quarters housing starts will remain level. Good news for auto sales. Unemployed trends downward.
ECONOMIC ACTIVITY TRENDS UP
A survey of financial forecasters, taken in the Spring, suggests that the latest recession is soon to be a topic in the economic history texts. There is strong agreement that economic output will push forward. The consensus forecast is for constant dollar Gross Domestic Product to grow at an annual rate of 3.1 percent through 1993-2. The current forecast for economic growth is in line with the historical long-term trend in real GDP.
The latest consensus forecast appears to agree with Gary Ciminero, economist for Fleet/Norstar Financial Group. He states, "the economy will likely resume sluggish growth during the second quarter, after last fall's plunge in consumer confidence interrupted the nascent postwar recovery. This renewed 'confidence crisis' gave us slow GDP growth last quarter." The upward trend in current dollar Personal Disposable Income is expected to continue. The forecast is for disposable income will grow by an annual rate of 5.5 percent over the upcoming four quarters. The retail sector will also see gains. The consensus forecast is calling for Personal Consumption Expenditures to grow by an annual rate of over 6 percent through 1993-2.
INTEREST RATES RISE
Joel Naroff, First Fidelity Bancorporation forecaster, feels that "interest rates lows have been reached for this cycle." The average forecast agrees. The consensus forecast, based on the Spring Survey, is looking for steady upward movement in the Federal Funds rate--reaching 5.0 percent by 1993-2. The prediction is for the Aaa Corporate Board rate to grow slowly over the next four quarters--reaching 8. 8 percent by 1993-2. Hong Kong Bank economist, Dr. Lacy Hunt, feels that economic "growth will be hampered by high long term rates and poor exports. …