We have the 2nd edition of GDP and current Q1 forecasts. We also have GDP+ and Q4 GDO guess. This is a picture based on the CBO’s estimate of potential GDP.
Picture 1: GDP (blue), GDO (brown), GDP+ (turquoise), current forecast from the Atlanta Fed (red triangle) and IHS Markit/S&P Global (sky blue square) and potential GDP (grey line), all in billions, chapter 2012 CAAP $ GDO estimates that the GDI business surplus remains constant at nominal Q3 2022 levels. GDP+ accumulates growth rates in the fourth quarter of 2019. Source: BEA 2nd edition, Philadelphia Fed, Federal Reserve Bank of Atlanta (3/1), S&P Global (3/1), CBO Budget and Economic Outlook February 2023and the author’s calculations.
Interestingly, even estimates of robust economic growth, such as the Federal Reserve Bank of Atlanta’s GDPNow estimate of 2.3% QoQ SAAR for 1Q, cannot close the projected output gap significantly.
Interestingly, the output gap turned negative after the shock of Russia’s extended invasion of Ukraine in February 2022.
Figure 2: Output gap implied by GDP (blue), GDO (brown), GDP+ (turquoise), current forecast from the Atlanta Fed (red triangle) and IHS Markit/S&P Global (sky blue square). According to GDO estimates, the GDI business surplus remains constant at nominal 2022Q3 levels. GDP+ accumulates growth rates in the fourth quarter of 2019. Source: BEA 2nd edition, Philadelphia Fed, Federal Reserve Bank of Atlanta (3/1), S&P Global (3/1), CBO Budget and Economic Outlook February 2023and the author’s calculations.
The output gap as of the fourth quarter of 2022 ranges from -0.4 to -0.8 percentage points of GDP, depending on the indicator. IHS Markit/S&P Global sees a recession in 2023, and its current forecast points to a widening output gap, even though Q1 growth is forecast only slightly negative (-0.3% yoy).