Chart of the Day: Anxiety Returns

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Odd Numbers

by Zubin Jelveh

Main

Olympics and City Economies There's No Melting Pot

Aug 12 2008 11:12AM EDT

Last quarter, the economists polled by the Philadelphia Fed for its Survey of Professional Forecasters said, on average, that the chances of a negative G.D.P. reading for the third and fourth quarter were 29.9 percent and 24.3, respectively.

In today's release, the Philly Fed reports that economists think these probabilities are now much higher: at 34.4 percent and 46.6 percent. The Anxiety Index, "the probability of a decline in real G.D.P. in the quarter after a survey is taken," has been a very reliable indicator of recessions. Since 1968, every quarter in which the index was over 40 percent was later determined to be recessionary:

Forecasts for third-quarter G.D.P. were also reduced from 1.7 percent to 1.2 percent and prospects for job growth were sliced. Economists now think job cutting will extend into the first three months of 2009. That would mean 15 straight months of job losses, similar to the last recession: