Another Reason to Worry About the US Economy

Every month, Bloomberg surveys dozens of economists — from banks, research firms, universities — on the outlook for the U.S. On average, as of Friday, they expected the economy to grow 2.2 percent during the next 12 months, adjusted for inflation. That said, there was a lot of variation, particularly on the down side: Predictions ranged from 3.2 percent growth to a 0.8 percent contraction. Here's how that looks:

Variation can matter. Back in 2007, when I was managing a similar survey at the Wall Street Journal, I noticed that although economists weren't very good at predicting recessions, they did tend to disagree more when one was imminent. That's what happened before the downturns of 1990 and 2001, and what ultimately happened before 2008. It's not a perfect indicator, and can spike without foreshadowing anything, but it's worth watching.

So what's happening now? To get a sense, I gathered the Bloomberg survey data from the end of each quarter, to see how much the forecasters disagreed. Specifically, I calculated the standard deviation — a measure of divergence from the average — of predictions for growth over the next 12 months. As of Friday, it stood at 0.76 percentage point, the largest dispersion since 2012, when Europe was still immersed in its debt crisis. Here's a chart (unfortunately, the data don't go back to before the last recession):

The level of disagreement makes sense: With variables such as Donald Trump's trade policy, Brexit, China's growth prospects, risky corporate debt and an inverted yield curve in play, it's particularly hard to guess what might happen. Whatever makes economists uncertain might also be what tips the economy into a slump.

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Mark Whitehouse writes editorials on global economics and finance for Bloomberg Opinion. He covered economics for the Wall Street Journal and served as deputy bureau chief in London. He was founding managing editor of Vedomosti, a Russian-language business daily.