Photo: Spencer Platt/Getty Images Ordinarily, four times a year, the Federal Reserve releases a document called the Summary of Economic Projections, or the SEP. This document lays out Fed policy-makers’ expectations about growth, inflation, unemployment, and short-term interest rates.
“The economic outlook is evolving on a daily basis,” he said. “And it really is depending heavily on the spread of the virus, and the measures taken to affect it, and how long that goes on. And that’s just not something that’s knowable. So, actually writing down a forecast in that circumstance didn’t seem to be useful. And in fact, it could have been more of an obstacle to clear communication than a help.
Other people who have been willing to make and revise economic forecasts probably should have thrown up their hands. Goldman Sachs issued a research note to clients on Sunday afternoon, revising downward the bank’s forecast for U.S. economic growth. Goldman now expects the U.S. economy to grow just 0.4 percent this year, shrinking at a 5 percent annualized rate in the second quarter, and then rebounding strongly in the third and fourth quarters after the epidemic abates.
Consider what we have seen just on Sunday evening and Monday, following Goldman’s issuance of this note at 3 p.m. on Sunday afternoon. The Dow Jones Industrial Average fell about 3,000 points, though as of Monday evening it looks set to rebound somewhat on Tuesday. Casinos aren’t just empty — they’re closing, sometimes at the initiative of their owners and sometimes by order of the government. Airlines are announcing even more service contractions and asking the government for a bailout.
jbarro About two-thirds of the US GDP is consumer consumption. If the latter is lower, GDP can be supported by higher investment and by reducing trade deficits.