Unexpectedly Intriguing!
August 2, 2011

With the United States having entered into microrecession in the first half of 2011, the next logical question to ask is whether that economic condition will turn into a full blown recession?

To find out, we applied our forward-looking GDP forecasting tool to project where GDP will likely be in the third quarter of 2011. The chart below illustrates our results:

Real GDP vs Climbing Limo Forecast vs Modified Limo Forecast, 2003-Present (2011Q2 Advance Estimate)

Using the advance estimate of inflation-adjusted GDP for the second quarter of 2011 ($13,270.1 billion in chained 2005 U.S. dollars), our "Modified Limo" forecasting method anticipates that real GDP will rise to be within 2% of $13.3 trillion in the third quarter of 2011.

We estimate there is a 68% likelihood that real GDP in 2011Q3 will be recorded as being somewhere between $13,157.6 billion and $13,436.9 billion, with growth from the current advance estimate value of $13,270.1 billion being slightly favored.

As such, we don't expect that the current microrecession will grow to become a full blown recession at this time.

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