Does the consensus work anymore?

Please see below the latest ‘Chart of the Week’ from State Street Global Markets


This week Michael Metcalfe, global head of Macro Strategy at State Street Global Markets discusses the unprecedented uncertainty across a range of US GDP forecasts.


“Whilst the market took the sharp decline in US GDP during the first quarter (Q1) of 2020 relatively well, there is far worse data to come. The current consensus for US GDP in the second quarter (Q2), is for a contraction of more than 25 percent on an annualised rate. With this in mind, the reaction to the Q1 data and the consensus for Q2 could suggest that the worst case scenario is already ‘discounted’, but caution is required.


“The data is so crazy that the uncertainty around these estimates is also unprecedented. Even if we remove 50 percent of the most extreme forecasts, the range of estimates for Q2 is a calm 12-percentage points between -30 percent and -18 percent. Such uncertainty is more than four-times the norm, even during a recession. This significantly weakens the normal modus operandi for financial markets, as simply picking the median forecast is now much less representative of the ‘consensus view’, which should also be reflected in market prices. Even though the markets need to process incoming data, relative to forecast has rarely been higher, it has also never been so difficult.”

Investing involves risk including the risk of loss of principal.

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.  You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.

The views expressed in this material are the views of State Street through the period ended August 28, 2019 and are subject to change based on market and other conditions.

This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those set forth in State Street's 2015 annual report and subsequent SEC filings.  State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, August 28, 2019 and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

State Street Corporation One Lincoln Street, Boston, MA 02111-2900.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street’s express written consent.

© 2019 State Street Corporation - All Rights Reserved


Expiration date: May 31, 2021

Tracking number: 3066293.1.1.GBL.RTL

Media Contacts

Contact a member of the State Street Media Relations Team.

Social Media

Business Wire NewsHQ℠
Cookie Settings