The climbing limo method of forecasting future GDP in the United States projects the nation's economic output in the fourth quarter of 2024 will be approximately $29.6 trillion.
If that number sounds familiar, it's nearly identical to the climbing limo's forecast for 2024-Q3, in which we indicated that quarter's nominal GDP would "be within a few percentage points" of that figure. With the third estimate of GDP now available, we can confirm that forecast was less than one percent off the mark. At $29,374.9 billion, nominal GDP came in below the climbing limo's forecast by 0.8%.
This time around, we think that with the climbing limo forecast nearly unchanged from the previous quarter, the actual nominal GDP figure to be reported by the Bureau of Economic Analysis has a good chance of coming in higher that the climbing limo forecast, similar to what happened in 2024-Q1.
You can judge that likelihood for yourself in the following chart, which tracks the climbing limo method's forecast against the recorded nominal GDP over the past 10 quarters for which GDP data has been finalized outside of annual revisions.
This chart adds the climbing limo's forecast for GDP in 2025-Q2, which at nearly $30.54 trillion, represents a 1.3% increase over the forecast for 2025-Q1.
About the Climbing Limo Forecasting Method
The climbing limo method is a very simple forecasting technique that projects the level of GDP some three quarters into the future using the nominal GDP figures from five quarters and three quarters before that point in time. As such, its forecast represents the momentum of the U.S. economy recorded between the two data points it uses. Deviations between the actual trajectory of GDP and the forecast tells how the momentum of the U.S. economy has changed, which provides useful information even when the differences between forecast and actual values are large.
For example, the biggest deviations it sees typically happen at turning points for the U.S. economy, when it either enters or exits periods of recession. Since 2022-Q3, the forecasts confirm the growth momentum of the U.S. economy has slowed, though it remains on an upward trajectory.
References
U.S. Bureau of Economic Analysis. National Income and Product Accounts. Table 1.1.5. Gross Domestic Product. [Online Database]. Accessed 19 December 2024.
Political Calculations. Forecasting GDP Using the Climbing Limo. [Online Tool]. 10 May 2005.
Image Credit: Microsoft Copilot Designer. Prompt: "A limousine driving up a bumpy, dirt road with the license plate labeled 'GDP'".
Labels: gdp forecast
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