Yesterday, Macroeconomic Advisors cut their 2Q GDP forecast, which caused Professor Brad Delong to say "IT'S TIME TO PANIC !!", which in turned caused Professor Paul Krugman to reiterate his "Third Depression Watch," which in turn has caused Doomers everywhere to cream themselves in barely concealed delight.
So I was all set to do an "I told you so," citing my January 11 forecast of "good growth" in the first quarter, followed by:
... in March or April, a debt ceiling increase will have to be passed. This Congress gives every indication of preparing for first class brinksmanship and idiocy on that score - meaning that either a government shutdown and/or default will actually occur, or dimwitted austerity measures will pass. So much for the second quarter.And I've been noting since at least March 25 in my Weekly Indicators column that "it appears that the Oil choke collar is indeed beginning to constrict the economy."
... Oil at 4% of GDP - given general inflation and GDP growth, is probably now more like $94 a barrel. But continuing expansion in Q1 should push us there. As with 2010, the effect of the price of Oil depends on how far and for how long it overshoots that mark. At this point I do not anticipate much of an overshoot, but combined with Congressional idiocy, this should be enough to restart fears of a double-dip in the April-July window ....
But here's the thing: GDP for the first quarter was just revised from 1.8% to .... 1.8%. And Macroeconomic Advisors' downgrade of forecasted 2Q GDP was from 3.2% to 2.8%!
In other words, the blogospheric Doomgasm has been prompted by fears that the economy will grow 1% more this quarter than last quarter!
For the record, I still see a slowdown or stall this quarter and/or next. And this is still going to be a long, hard slog of a recovery, and yes it would be nice if somebody in Versailles actually gave a damn.
I just wanted to add that I've also noted the same issues (a slowing economy) here and here. In other words, readers of this blog -- data driven and wonky that it is (with pretty graphs to portray numerical data over a time) -- knew what was happening. And neither NDD nor I are saying the world is coming to an end, or that we're in a depression or that the pits of hell will open up and swallow us whole.
I do want to give NDD a big hat tip for catching the issue far earlier than I did. Thankfully, I've given up betting him on his economic predictions!