Recession Consensus Among Economists Skyrockets To... 30%

Avoid the summer rush - heed this minority opinion and get a head start on your looting and stockpiling today.

Thirty percent of economists now believe the economy will shrink in the first half of this year, up from 10 percent who thought this in January, according to a survey being released Monday by the National Association for Business Economics, known by its acronym NABE.

"That's a striking difference," said Ken Simonson, chief economist for the Associated General Contractors of America and the NABE's point person on the survey. The tone of the overall survey, he said, was "extremely gloomy."

To be clear, the prospect being handicapped is that economic output shrinks during the January-June period.  That's similar to, but not quite the same as the formal definition of a recession, which requires two consecutives quarters of negative growth.  If we were to see negative annualized growth of, say, (0.5)% in Q1 and positive growth of 0.5% or less in Q2, that'd still amount to first half net shrinkage, thus satisfying the condition polled.  Any technical recession will necessarily be a recession as defined by NABE, but not vice versa.

So if you polled the same group about the prospects of a formal recession during the same time period, you'd presumably get fewer than 30% responding affirmatively.

Admittedly, the jump from 10% to 30% since January is notable, so long as the polling methodology was unchanged.  But it doesn't nearly jive with the insistence by some Presidential candidates and media outlets that an early 2008 recession is a foregone conclusion.

It's also worth noting that the January NABE survey was conducted before the 4Q07 data (showing growth of just 0.6% that quarter) was released.  So it's not particularly astonishing that the percentage of economists expecting that number to dip negative has since increased.  The increase in recession-forecasters is no less valid, it's just not as meaningful as it might be if you didn't realize the comparison straddles that 3-month-old news.