USA – GDP growth for Q3 and Q4 2013 and the Fed’s forecasts

In June after its FOMC meeting, the Federal Reserve has published its forecasts for 2013. GDP growth is expected for 2013 to be in the range [2.3 – 2.6%]. The middle of the range is 2.45%.
We then have to compare this number to the result of the first two quarters.
In Q1 GDP growth was 1.1% at annual rate and in Q2 it was 1.7%. This means that the carryover growth at the end of the second quarter is just 1.05%. (carryover growth is the average growth for 2013 if Q3 and Q4 GDP level remains at Q2 level (last known)).
To converge to 2.45% on average for 2013, GDP numbers have to be 7.4% at annual rate both in Q3 and Q4.
Such a sequence has not been seen since the beginning of the 80’s when Ronald Reagan had a very strong program to boost the economy.
The current fiscal policy is conditionned by sequestration and we see that since the beginning of 2010 government expenditures (local and federal) are a drag on GDP growth.
Once again, the Fed’s behavior will be interesting to watch.
Nevertheless as it was mentionned by Tim Duy (@TimDuy), (see here): in the past unemployment rate forecasts were more accurate than GDP forecasts. Even with that in mind the gap will be large and will probably require interpretation by Ben Bernanke.

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