I owe an apology to my readers and thank "Anonymous" for catching my error in arithmetic. The Fed's formula for predicting GDP growth suggests about 1% in 12 months. The current formula is GDP = 1.14417 + (-0.06132 X 3mo./10yr. spread).
You can see the Fed's monthly estimate for DGP growth as well as their current formula at http://www.clevelandfed.org/research/data/yield_curve
2 comments:
Deb,
Does the Fed formula change every month or only sporadically?
The formula yields 0.97 for July, while the Fed is reporting 1.14.
Also, couldn't find the current formula at the Fed link.
Thank you for your help.
They give the broad outline of their model but not the monthly weightings of the variables.
As you noted, the formula you refer to gave 0.97 in July; the 1.14 forecast is for August or - probably - September.
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