Expected 2009 Growth Trimmed Symmetrically

November 10, 2008

Results of the latest consensus forecasts have been published in The Economist. That paper conducts a survey every month. Projected growth for 2009 is substantially lower in the November survey than in October’s, with many figures in the red. The size of the latest revisions and the new levels are similar for Japan, Euroland and the United States. Pessimism about Britain deepened more radically. Monetary policy cycles have not been concurrent. The Fed cut rates before the ECB or BOJ had moved, and U.S. cumulative rate reductions are substantially greater than accrued cuts in Europe or Japan. The dollar’s better tone in 2008 against the euro is premised in part on the view that the Fed’s early response will lead to an earlier and more impressive emergence from recession. That inference is not reflected in the latest forecasts. The table below compares the latest 2009 growth forecasts with those in the surveys of October and six months ago.

Survey Date November October May 2008
United States -0.2% +0.6% +1.7%
Euroland -0.1% +0.6% +1.5%
Japan -0.1% +0.6% +1.5%
Britain -1.0% +0.1% +1.7%
Canada +0.5% +1.4% +2.1%
Australia +1.9% +2.3% +2.9%

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