The Wall Street Journal's monthly Economic Forecasting Survey was released today, and the verdict is in: The average forecast for the federal funds rate in June is 4.65%. Stan Jonas writes:
Wall Street Journal Survey of Economists as to where Fed Funds will be as of June 2006....
Simple arithmetic:...If they go past May Funds will be higher than 5.00% 80% of those surveyed thought that the FED would be done by May or Earlier....
back to the Journal report, the economists also weigh in with their forecasts for GDP growth:
Estimates for the fourth quarter [annualized GDP growth] were cut [to 3%] but the outlook for 2006's first half was unchanged [at 3.5% for the first quarter, and 3.3% for the second quarter]. The economists gave their first estimates for the second half of 2006; they expect growth throughout next year to average 3.2%.
A couple of other interesting items:
Last week, a commission appointed by President Bush backed two designs to overhaul the tax code for individuals and businesses. The Simplified Income Tax, which among other provisions would reduce the number of tax brackets, won support from 24% of the economists, while the Growth and Investment plan was embraced by 21%. (Read more about the panel's recommendations)...
But the economists placed long odds on any significant tax changes happening soon. More than two-thirds, or 71%, said the likelihood of an overhaul in the next two to three years was a "long shot," while 24% predicted a 50-50 chance. Just three economists saw the prospect for change as "excellent" or "good."
And on the virtues of Federal Reserve Chairman, old and new:
The economists were asked to measure Mr. Greenspan and Mr. Bernanke, ranking their greatest strengths and greatest weaknesses.
Mr. Greenspan received high marks from the economists for his knowledge of Wall Street, with 36% of the economists ranking his familiarity with markets as his greatest strength. In contrast, only one economist described familiarity with markets as Mr. Bernanke's greatest strength, while one-fifth of the economists said it was his greatest weakness.
However, the former Princeton professor's extensive academic background in monetary economics is held in high esteem: 83% of those surveyed called it Mr. Bernanke's greatest strength. Just one economist said academic credentials were Mr. Greenspan's strongest suit, while 30% called it his greatest weakness.