Unexpectedly Intriguing!
April 2, 2012

With the BEA's release of the third and final (for now) GDP estimate for the fourth quarter of 2011, we can now project ahead and finalize our forecast of the size of the U.S. economy in the first quarter of 2012. Our accompanying chart shows what pure momentum mixed with some statistical analysis would project:

Real GDP vs Climbing Limo Forecast vs Modified Limo Forecast, 2003 - Present, Incorporating 2011Q4 Final Estimate

Our preferred "modified limo" forecasting technique anticipates that inflation-adjusted GDP for the first quarter of 2012 will be reported to be approximately $13,508.8 billion constant 2005 U.S. dollars when the BEA records its third estimate of this quarter's GDP at the end of June 2012. The BEA will provide its first estimate for this quarter at the end of April 2012, and its second estimate near the end of May 2012.

To be more accurate in describing our forecast though, what we're really forecasting here is the level of real GDP in the U.S. for which there is a 50% chance of the actual recorded value of GDP being higher and a 50% chance of the actual recorded value of GDP being lower. We would be greatly surprised if we were dead on the mark!

Using statistics, we can give the following probabilities for where 2012-Q1's level of inflation-adjusted GDP will be recorded. All values below are given in terms of constant 2005 U.S. dollars:

  • There is a 68.2% probability that we'll see GDP recorded between $13,367.4 billion and $13,650.1 billion.
  • There is a 95.0% probability that we'll see GDP recorded between $13,226.0 billion and $13,791.5 billion.
  • There is a 99.7% probability that we'll see GDP recorded between $13,084.7 billion and $13,932.9 billion.

We've set the default values in our tool below for forecasting the midpoint of our projected GDP range using our "modified limo" method:

Previous Quarters Inflation-Adjusted GDP Data
Input Data Values
Three Quarters Ago (Billions of "Chained" U.S. Dollars)
Two Quarters Ago (Billions of "Chained" U.S. Dollars)
Most Recent Quarter (Billions of "Chained" U.S. Dollars)
Next Quarter's Inflation-Adjusted GDP Estimate
Calculated Results Values
"Modified Limo" Estimate (Billions of "Chained" U.S. Dollars)

One thing to note about our methods is that even if they turn out to be off-target, any significant deviation in the level of GDP recorded by the BEA and our projections can be taken as in indication of a significant shift in the direction of growth for the U.S. economy. In the event of such deviations, our forecasting method will self-correct, as can been seen in the chart we've included in this post.

Looking further into the future, we continue to anticipate that the growth rate of the U.S. economy will remain positive but will also continue decelerating in the second quarter of 2012.

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.