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| Home Front: Economy |
| Ray Fair's Fairmodel update - YOUZA! |
| 2005-11-02 |
| Via Econopundit: Ray has at last finished this quarter's updating, re-estimation, and re-running of Fairmodel. Here are some rather striking predictions from this quarter's Forecast Memo: Real Growth and the Unemployment Rate: The predicted growth rates for the next four quarters are 5.2, 2.9, 2.3, and 2.2 percent, respectively. The unemployment rate at the end of 2006 is 4.6 percent. The jobs variable, JF, is predicted to increase in the four quarters by 2.7, 2.8, 2.4, and 2.0 percent, respectively. The reason for the large change in 2005:4 is a large predicted increase in inventory investment. In the last two quarters real final sales have grown more rapidly than real output, and the model is predicting a positive inventory correction. Inflation: Inflation as measured by the growth of the GDP deflator (GDPD) is predicted to be 4.6 percent in 2005:4 and then 4.4, 4.4, and 4.3 percent in the next three quarters. These predicted values are higher than the actual values in the past few years and probably higher than most others are predicting. If the model is right, inflation is going to be a problem in the next year. Monetary Policy: The estimated interest rate rule...is predicting that the three month bill rate (RS) will rise to 4.4 percent by the end of 2006. Other Variables: The federal government budget deficit is predicted to be around $310 billion in the next four quarters (on a NIPA basis)...By the end of 2009 it is predicted to be $395.7 billion. The U.S. current account deficit...is forecast to be around $790 billion in the next four quarters (on a NIPA basis), which is large by historical standards. Whoa! Can you say -- in a deep dramatic voice -- BOOM!!!!! |
| Posted by:anonymous2u |
| #1 Doesn't count when there's a Republican in the White House. |
| Posted by: Robert Crawford 2005-11-02 18:27 |