New Consensus Economic Forecast: Not Much Different

A new consensus economic forecast is out, courtesy of the Philadelphia Fed, and it's not too much different from before, except that Q3 of 2009 is noticeably weaker.  Here's the forecast of GDP growth:

The economy is contracting slightly this quarter, according to the average view, and will begin to grow in the third quarter of this year.  Here's the comparison with last quarter's consensus:

What's notable about the consensus is not that the recession ends, but that the recovery is so mild.  Housing construction typically surges early in the recovery (even beginning to surge during the recession), but that's not happening because of the huge overhang of excess supply.  Consumer spending in the consensus view is very weak.  It grows, but at a very anemic pace, due no doubt to continuing poor confidence combined with the credit crunch.  Non-residential investment is also slow to recover, thanks to the weak overall economy.

Businesses should not bet the store on an economic forecast, not even mine.  (Years of forecasting has humbled me.  If you find a forecaster who is not humble, he's either young or foolish.  Or both.)  Using the consensus economic forecast is a good way around the challenge of picking an economic guru.