SOOTHSAYER CONSENSUS: No Recession Coming (Positive Consensus/Bear Market Indicator)
The latest survey from the National Association for Business Economics is telling us that the Soothsayers (a.k.a the economists) do not see any sign of a recession coming down the road. They do see growth levels coming down though.
“The panelists' median forecast for annual second-quarter 2014 real GDP growth is 3 percent, down from the 3.5 percent median forecast when the full Outlook survey was last released in June.”
Here’s the clincher:
“Economists said the probability of the U.S. economy entering a recession in 2014 or 2015 is extremely low, with 60 percent of panelist saying the odds were less than 10 percent.”
Uh oh. When the Soothsayers say the likelihood of something occurring or not occurring is extremely low or high, it makes us take pause because sadly the Soothsayers usually do not do a very good job of…soothsaying! At the start of the year the economist illumnati were calling for a breakout in economic growth for 2014. We ended up seeing GDP contract almost 3 percent. If they are right now pretty sure things are going to be good, we may want to take the other side of the trade.
The Soothsayers also took a 180 degree turn on their forecasts of when the Federal Reserve will start increasing rates. In the latest survey, economists believe that the Federal Reserve will increase interest rates earlier than many expect.
“More than half of those surveyed forecast the Fed will next increase its federal funds rate target in the first half of 2015, with a plurality of almost 37 percent expecting a hike during the second quarter of next year. Another 36 percent said they expect an initial rate hike in the second half of next year. The results are nearly reversed from the June survey, when 33 percent expected a rate increase in the first half of 2015 and 53 percent expected a hike in the second half.“
It's not for a lack of trying. Unfortunately humans are just no good at predicting the future with any level of consistency.