NABE Outlook Survey - March 2016


The NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 48 professional forecasters (see last page for listing). The survey, covering the outlook for 2016 and 2017, was conducted February 24—March 10, 2016. The NABE Outlook Survey originated in 1965 and is one of three surveys conducted by NABE; the others are the NABE Business Conditions Survey and the NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics (NABE) is the professional association for those who use economics in their work. NABE has over 2,700 members and 43 chapters nationwide. Thomas Kevin Swift, CBE, American Chemistry Council (chair); Steve Cochrane, CBE, Moody's Analytics; Gregory Daco, Oxford Economics; Jack Kleinhenz, CBE, National Retail Federation; and John Silvia, CBE, Wells Fargo, conducted the analysis of survey responses for this report. The views expressed in this report are those of the panelists and do not necessarily represent the views of their affiliated companies or institutions. This report may be reproduced in whole or in part with appropriate citation to NABE.


"Most panelists in the NABE March Outlook Survey expect the next U.S. business cycle peak will not occur until 2018 or later," according to NABE President Lisa Emsbo-Mattingly, CBE, director of research, Global Asset Allocation at Fidelity Investments. "In the three months since the last survey, 66% of the panelists have lowered their forecasts for 2016 growth of inflation-adjusted gross domestic product, or real GDP [the broadest measure of economic activity]. In light of volatility of markets and data, the panel forecasts the US will grow 2.2% in 2016, a deceleration from the 2.4% real GDP growth realized in 2015."


"An even larger 79% share of panelists lowered their 2017 growth outlook," noted Gregory Daco, head of U.S. macroeconomics, Oxford Economics USA. "For both 2016 and 2017, half of the participants reduced their estimates by 0.3 percentage point or more."


"Following the Federal Reserve's hike in short-term interest rates in December to a range of 0.25% to 0.5%, two-thirds of the NABE panelists expect the Fed to make just two more hikes this year, bringing the median mid-point forecast to 0.88% at the end of the fourth quarter of 2016," added Steve Cochrane, CBE, managing director, Moody's Analytics. "This is lower than the year-end expectation of 1.13% projected in December."





Most NABE Outlook Survey panelists do not expect the next U.S. business cycle peak to occur until 2018 or later. Specifically, 26% of respondents expect the peak to occur in 2018, 22% expect it in 2019, and 15% expect it in 2020 or beyond. Only 13% of panelists expect a peak in 2017, 2% indicate the peak will occur in the second half of 2016, and 2% believe it already occurred in 2015. One-fifth of panelists are unsure when the peak will occur.

The most likely major contributor to the next U.S. recession is tightening credit conditions. Half of the panel (50%) believes that tightening credit conditions are most likely to be a major contributor to the next U.S. economic recession.

The panel's median forecast for growth in inflation-adjusted gross domestic product (real GDP) from the fourth quarter of 2015 to the fourth quarter of 2016 (Q4/Q4) decreased by 0.1 percentage point since the December survey to 2.5%. The forecasted annual average growth rate for 2016 has also inched downward to 2.2% in the current survey from 2.6% in December. The median 2017 outlook calls for 2.4% annual average growth.