What experts are predicting — and how that affects you.
Every month, TheWall Street Journal surveys some 60 economists to weigh in on major economic indicators with their forecasts for the next few years. Here’s the latest survey published early February 2018.
February 2018 survey predictions
In February 2018, 63 financial, business and academic economists threw their hats into the ring to predict the future of the US economy. Among these experts, most predict that the Federal Reserve will raise interest rates in June. Tax reform legislation, signed into law by President Donald Trump in December, gives the economists faith in the strength of the economy. The unemployment rate is expected to continue to decline, with the gross domestic product (GDP) predicted to grow further.
Here’s what the Journal‘s predictions mean for the economy and how they can affect your spending, investments and cost of living.
The federal funds rate refers to the interest rate that banks charge on lending to one another overnight. For the Federal Reserve, this rate is a way to control economic growth — particularly inflation, which ultimately affects every facet of the world’s economy, from the cost of living to the cost of doing business.
The majority of economists (98%) surveyed by the Journal are expecting the federal funds rate to increase in June 2018. The remaining 1.59% forecast that it will remain the same — a slight increase in economists from previous months’ predictions.
On December 13, 2017, the federal funds rate increased a quarter point, bringing it to a range of 1.25% to 1.50%. The median federal funds rate is now 1.38%.
Of the 98% of experts who expect a federal funds rate increase in June, they forecast an average rate of 1.84%. Mike Cosgrove of Econoclast predicts the highest rate predicted at 2.1%, while Lindsey Piegza of Stifel, Nicolaus and Company predicts the lowest rate at 1.38% — the current rate.
Why do 98% of economists expect the rate to increase?
Confidence in a federal funds rate increase indicates that experts expect a continued strengthening of the US economy. The current federal funds rate is low compared with the past, but it’s been climbing back since the financial crisis hit in 2008. Unemployment levels are expected to fall next year, meaning the job market might be able to withstand a rate rise.
So far this year, we haven’t seen a rise in the federal funds rate. The last rate rise in December 2017 marked the third that year and the fifth since the government cut the rate to nearly 0% during the financial crisis.
What does the federal funds rate rise mean for consumers?
The effects of the federal funds ripple out into many other economic factors. An increase in this rate means increased interest rates for savings accounts, auto loans, mortgages and credit cards.
This is good news for savers, who could see bigger returns on their balances. But it can be bad news for borrowers contending with higher interest charges on lending products.
How has the federal funds rate moved in the past?
Below, we track the federal funds rate over a 12-year period — from 2009 and projected to 2020 — against the actual federal funds rate and estimated rate based on the Journal‘s survey.
The range of these economists’ predictions grows wider as forecasts are projected further into the future. Predictions were very close to actual rate movements from 2009 to 2017. But from mid-2017 onward, forecasts didn’t always hit the mark.
Who are the most accurate economists for predicting the federal funds rate?
We analyzed the Journal‘s expert predictions for the past three years against actual rate movements. Using our results, we calculated the top three most accurate economists for the federal funds rate, along with their most recent predictions for June 2018.
Top three economists for federal funds rate
The federal funds rate increased last year to a range of 1.25% to 1.5% — resulting in a median of 1.38%. All three of the most accurate economists predict an increase for June 2018. Interestingly, they all expect to see the same rate: 1.88%.
Lewis Alexander
1.88% / +.50% ↑
Chief US economist Nomura Securities International
Michael Carey
1.88% / +.50% ↑
Chief US economist Credit Agricole CIB
Carl R. Tannenbaum
1.88% / +.50% ↑
Executive vice president, chief economist The Northern Trust
The 10-year note is a bond that’s offered by the US Treasury for people to buy. Bonds come with different terms, but the 10-year note is the most commonly watched and commented on. Sold at auction, they indicate how confident investors are in the economy.
When you buy one of these notes from the government, it behaves much like a loan you’ve allowed the government to borrow from you. With this note, you gain fixed interest payments twice a year until the 10 years is up, after which you can then get your money back. These notes are an important indicator of the overall economy, used as a benchmark for banks to set other interest rates.
This month, all of our economists (100%) predict that interest on the 10-year note will increase by June 2018. The average rate today is 2.90%, which is a 0.14% increase from what the experts predicted in January. The highest prediction came from Edward Leamer and David Shulman of UCLA Anderson Forecast at 3.25%, while the lowest came from James F. Smith of Parsec Financial Management at 2.44%.
What does this mean for consumers?
When the 10-year note rate rises, so do interest rates on all longer-term loans, like 15-year fixed-rate mortgages. Rising mortgage rates can be good for bondholders, because it typically results in even bigger interest payments.
Our graph shows the 10-year note rate over the past few years alongside future predictions. We can see that after a recent downturn, it’s expected to start picking up again.
What do the most accurate economists in this category say?
We compared the Journal experts’ past predictions to the actual 10-year-note rate to calculate the most accurate economists in each category. Here are the top three most accurate economists we found, along with their most recent predictions for June 2018.
Top three economists for 10-year note
The actual 10-year note rate was at 2.41% in December 2017. All three of these economists predict an increase for June 2018.
Douglas G. Duncan
2.8% / +.39% ↑
Chief economist, senior vice president Fannie Mae
John Lonski
2.65% / +.24% ↑
Chief economist, managing director Moody’s Investors Services
John Silvia
2.85% / +.44% ↑
Chief economist, managing director Wells Fargo & Co.
To get our results, we analyzed data pulled from The Wall Street Journal Economic Forecasting Survey (and graphs). We calculated the top three economists in each category reported by totaling their past predictions’ differences from the actual rate and dividing that total by the number of predictions to result in the mean absolute percentage error. We took past predictions from the past six periods, using only economists who participated in each one.
Finder.com provides this analysis entirely independent of TheWall Street Journal. We work to provide our readers with the tools to understand how money affects the world around them.
Past predictions
Federal funds rate
The majority of economists (97%) surveyed by the Journal correctly predicted the federal funds rate would increase in December 2017. The remaining 3% forecast that it would remain the same.
In reality, it increased a quarter point to a range of 1.25% to 1.5% on December 13, 2017. The median federal funds rate is now 1.38%.
Of the 97% who expected a federal funds rate increase in December, these experts forecast an average rate of 1.37%. Daniel Bachman of Deloitte LP predicted the highest rate, at 1.5%, while Mark Nielson of MacroEcon Global Advisors and Bart van Ark of the Conference Board predicted a low 1.13%.
Who are the most accurate economists for predicting the federal funds rate?
We analyzed the Journal‘s expert predictions for the past three years against actual rate movements, using our results to calculate the most accurate economists for the federal funds rate.
Here who we found were the top three most accurate economists, along their most recent predictions for December 2017.
Top three economists for federal funds rate
The federal funds rate increased this month to a range of 1.25% to 1.5% — a median of 1.38%. All three of the most accurate economists correctly predicted this rate.
Lewis Alexander
1.38%
Chief US economist Nomura Securities International
Michael Carey
1.38%
Chief US economist Credit Agricole CIB
Carl Tannenbaum
1.38%
Executive vice president, chief economist The Northern Trust
Gross domestic product
For the December 2017 survey, 71% of economists expect to see the GDP decrease in the last quarter of 2017. Of those expecting a fall, they believe it will decrease by an average 0.26 percentage points — down to 2.74%, compared with the 3% in Q3 2017.
Who are the most accurate economists for predicting the GDP?
We analyzed expert predictions from the past year and a half — over six quarters — against actual movement of the GDP to calculate the most accurate economists. These are the top three most accurate, with their most recent predictions for Q4 2017.
Top three economists for GDP
The actual GDP was at 3% in the third quarter of 2017. All three of these economists are predicting a decrease for Q4 2017.
Susan M. Sterne
2.4% / -0.6% ↓
President Economic Analysis Associates Inc.
Lynn Reaser
2.8% / -0.2% ↓
Chief economist Point Loma Nazarene University
Mike Cosgrove
2.4% / -0.6% ↓
Chief economist, managing director Econoclast
Consumer price index
All of the Journal‘s economists in the December 2017 survey predict the CPI will increase, with an average estimate of 2.00 percentage points. This is a jump from June 2017’s CPI at 0.0%.
Who are the most accurate economists for predicting the CPI?
We analyzed the Journal economists’ predictions from the past three years against the actual movements of CPI to calculate who were most accurate. These are the top three most accurate alongside their most recent predictions for CPI in December 2017.
Top three economists for CPI
The actual CPI was at 0.0% in June 2017. All three of these economists are predicting an increase for December 2017.
Ian Shepherdson
2% / +2.0% ↑
Chief US economist, founder Pantheon Macroeconomics
Ethan Harris
2.1% / +2.1% ↑
Co-head of global economics research Bank of America Securities — Merrill Lynch
John Lonski
2% / +2.0% ↑
Chief economist, managing director Moody’s Investors Service
Unemployment rate
The majority of economists believe the unemployment rate will decrease this month, with 98% of those in agreement. The average estimate of those predicting a decrease is 4.1%, compared to June’s unemployment rate of 4.4%.
Who are the most accurate economists for predicting the unemployment rate?
By analyzing these experts’ predictions over the past three three years against actual movement in the unemployment rate, we’ve calculated the most accurate economists. These are the top three most accurate experts, along with their most recent predictions for December 2017.
Top three economists for unemployment rate
The actual unemployment rate was at 4.4% in June 2017. All three of these economists predict a decrease for December 2017.
Brian S. Wesbury & Robert Stein
4% / -0.4% ↓
Chief economist & deputy chief economist First Trust Advisors, L.P.
Jack Kleinhenz
4.1% / -0.3% ↓
Chief economist National Retail Federation
Mike Fratantoni
4% / -0.4% ↓
Chief economist, SVP of research & industry technology Mortgage Bankers Association
In January 2018, 68 financial, business and academic economists threw their hats into the ring to predict the future of the US economy. Among these expert predictions, most are predicting that the Federal Reserve will raise interest rates in June. The tax reform, signed into law by Donald Trump in December, has given the economists faith in the strength of the economy. The unemployment rate is expected to continue to decline, with the gross domestic product (GDP) predicted to grow further.
Federal funds rate
The federal funds rate refers to the interest rate that banks charge on lending to one another overnight. For the Federal Reserve, this rate is a way to control economic growth — particularly inflation, which ultimately affects every facet of world’s economy, from the cost of living to the cost of doing business.
The majority of economists (99%) surveyed by the Journal are expecting the federal funds rate to increase in June 2018. The remaining 1% forecast that it will remain the same.
On December 13, 2017, the federal funds rate increased a quarter point, bringing it to a range of 1.25% to 1.5%. The median federal funds rate is now 1.38%.
Of the 99% who are expecting a federal funds rate increase in June, these experts forecast an average rate of 1.80%. The highest rate predicted was 2% by Daniel Bachman of Deloitte LP. The lowest rate was 1.38%, which is what it is currently, by Steven Blitz of TS Lombard.
This is the third rate rise this year and the fifth since the government cut the rate to almost 0% during the financial crisis.
Who are the most accurate economists for predicting the federal funds rate?
We analyzed the Journal‘s expert predictions for the past three years against actual rate movements, using our results to calculate the most accurate economists for the federal funds rate.
Here is who we found were the top three most accurate economists, along with their most recent predictions for June 2018.
Top three economists for federal funds rate
The federal funds rate increased last month to a range of 1.25% to 1.5% — a median of 1.38%. All three of the most accurate economists predict an increase for June 2018.
Lewis Alexander
1.88% / +.50% ↑
Chief US economist Nomura Securities International
Michael Carey
1.63% / +.25% ↑
Chief US economist Credit Agricole CIB
Carl Tannenbaum
1.63% / +.25% ↑
Executive vice president, chief economist The Northern Trust
10-year note
The 10-year note is a bond that’s offered by the US Treasury for people to buy. Bonds come with different terms, but the 10-year note is the most commonly watched and commented on. Sold at auction, they indicate how confident investors are in the economy.
When you buy one of these notes from the government, it behaves much like a loan you’ve allowed the government to borrow from you. With this note, you gain fixed interest payments twice a year until the 10 years is up, after which you can then get your money back. These notes are an important indicator of the overall economy, used as a benchmark for banks to set other interest rates.
This month, the majority of our economists (97%) predict that interest on the 10-year note will increase in June 2018, with the rest expecting a decrease. The average rate out of those who predict an increase is 2.76%, which is a 0.34% increase from what the experts predicted in December, 2017. The highest prediction came from Edward Leamer and David Schulman of UCLA Anderson Forecast at 3.1%, while the lowest came from Mike Moran and Sonia Meskin of Standard Chartered at 2%.
What do the most accurate economists in this category say?
We compared the Journal experts’ past predictions to the actual 10-year-note rate to calculate the most accurate economists in each category. Here is who we found were the top three most accurate economists, along with their most recent predictions for June 2018.
Top three economists for 10-year note
The actual 10-year note rate was at 2.41% in December 2017. All three of these economists predict an increase for June 2018.
Douglas Duncan
2.5% / +.09% ↑
Chief economist, senior vice president Fannie Mae
John Lonski
2.65% / +.24% ↑
Chief economist, managing director Moody’s Investors Service
John Silvia
2.8% / +.39% ↑
Chief economist, managing director Wells Fargo & Co.
For all media inquiries, please contact:
Richard Laycock, Senior content manager & insights editor
Jennifer McDermott has been featured in Forbes, USA Today, Huffington Post, CBS and the Los Angeles Times. She is passionate about breaking down complex themes and providing actionable advice that empowers people to make better decisions about their money.
8 powerhouse career women share how Justice Ruth Bader Ginsburg influenced their own professions and financial lives through her advocacy for women’s rights and freedom to their own financial future.
According to the latest research from finder.com, Americans spend about $750 billion on such convenience services as delivery, driving, handiwork, pet needs and subscription boxes.
As International Women’s Day (IWD) approaches on March 8, we compare how 16 countries rank across 10 metrics to find the best countries to live in for working women. Where would you want to work?
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
