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GDP forecast – preliminary 2009:Q4

In Forecast on January 28, 2010 at 1:26 AM

Preliminary UK results on fourth quarter GDP are now out, read here.

Interestingly, the UK result of +0.1 officially signals that the British economy is now out of recession. Previously, 6 negative quarters of consecutive malproduction had been endured–read ONS coverage. US results on fourth quarter GDP will be issued January 29, i.e., Friday. Apparently, there is a consensus forecast of +4.6 growth expected–read Straits Times coverage.

Below are 3 graphics comparing the growth bars for the two countries by eye, with data sourced through the ONS, BEA and the BOG, respectively.

I have again regressed UK quarterly numbers on US quarterly results, spanning 1955:Q2-2009:Q4, to see how Anglican measures might produce significant or insignificant contemporaneous forecasts. I have also included an AR(1) model and US Industrial Production regression estimate, in order to see which models best perform.

In short, all 3 simple bi-variate dynamic model tests significantly, proven at the 99 percent confidence interval; see the regression results–Regression Results.

Interpretation reads most robustly on–Model 2–in terms of R^2, i.e., regressing US GDP on US Industrial Production. For every 1 percent increase in US Industrial Production, there is an associated 1.33 percent increase in US GDP, all else equal.

Accordingly, the forecast for US 2009:Q4 seasonally adjusted real GDP growth is +4.1. That number is scheduled for release this Friday at 8:30 AM, read here.

Note: GDP estimates on both US and UK variables are in real terms, seasonally adjusted.

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  1. I like your graphs. You do a good job at researching.

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