WSJ survey shows firmer Q2 GDP growth and lower recession odds

Economists in the Wall Street Journal’s July survey put second-quarter US GDP growth at 2.12%, up from 1.65% in the April survey, according to an Econbrowser analysis of the results. The same analysis said respondents lowered the subjective probability of a recession over the next 12 months to 25% from 33%, a shift relevant for investors tracking growth, rates and policy risk.

The survey was conducted from July 2 to July 7. Econbrowser compared the Journal’s mean forecast with several other readings, including the Financial Times-Booth June survey, the International Monetary Fund’s July World Economic Outlook, the Atlanta Fed’s GDPNow estimate from July 8 and the New York Fed’s nowcast from July 10.

On that comparison, the Atlanta Fed and New York Fed nowcasts surrounded the Journal survey’s second-quarter growth estimate. Econbrowser said the FT-Booth June median level matched the Journal survey mean for fourth-quarter GDP.

The data were presented in billions of chained 2017 dollars at a seasonally adjusted annual rate, using figures from the Bureau of Economic Analysis, the Wall Street Journal, the IMF, Booth, the New York Fed, the Atlanta Fed and the author’s calculations. Chained-dollar GDP is designed to remove the effect of price changes, while the annualized rate expresses a quarter’s pace as if it persisted for a full year.

Lower first-quarter base shapes the comparison

The higher second-quarter growth estimate does not translate into a materially higher implied GDP level than in the April survey. Econbrowser attributed that to a weaker reported GDP outcome in the first quarter, which lowers the starting point for the subsequent growth calculation.

That distinction matters for interpreting survey changes. A faster quarterly growth rate can coexist with a similar level path if the prior quarter was revised down or came in below expectations. Econbrowser said the implied GDP level in the July and April Journal surveys was essentially unchanged despite the higher second-quarter growth figure.

The survey also showed disagreement among forecasters, though Econbrowser said only one projection pointed to two consecutive quarters of negative quarter-on-quarter growth. The analysis did not identify that forecaster.

Rate path shifts higher since January

Econbrowser noted that the Journal’s July forecasts were compiled largely before the re-escalation of the US-Iran war. The timing also applied to interest-rate forecasts, which the analysis said had moved higher compared with the January survey.

In a comparison of the 10-year Treasury yield with Journal survey forecasts, Econbrowser said projected rates were about 20 basis points higher by the end of 2026. A basis point is one-hundredth of a percentage point, so a 20 basis point move equals 0.20 percentage point.

The analysis said the higher rate path may arrive during a period of heightened interest sensitivity, linking that point to a separate discussion of artificial-intelligence investment sustainability. It did not present the survey figures as a market forecast beyond the reported economist expectations.

This story draws on original reporting from Econbrowser.