by Calculated Risk on 11/17/2008 08:59:00 PM

Goldman Sachs has a research note out tonight asking: Fourth-Quarter GDP – How Bad Could It Be? Their answer: pretty bad.

The Goldman forecast is for a 3.5% annualized decline in GDP for Q4. But in the research note tonight they calculate some alternative scenarios.

In a "just awful" scenario, Goldman estimates GDP could decline by 6% annualized in Q4, and in a "worst case" scenario by 7.8% (either would be the worst quarter since the early '80s). GDP was -7.8% annualized in Q2 1980 and -6.4% in Q1 1982.

Looking at the details, I think the "just awful" scenario is possible (with consumer spending off 5%), but the worst case is very unlikely. We will know more as PCE is released monthly.

Compare that to the National Association for Business Economics (NABE) forecast released this morning, from the WSJ NABE: ‘Prolonged’ Recession Expected:

According to NABE, 96% of survey respondents said the U.S. is in recession, with respondents split on whether it began in late 2007 to early 2008 or in the third quarter of this year. Gross domestic product contracted 0.3%, at an annual rate, during the third quarter. The NABE panel expects GDP to fall at a 2.6% rate this quarter and 1.3% in the first quarter of 2009.

Even though most NABE economists finally recognize the recession, I think they are still too optimistic. But the consensus could be correct - guessing inventory changes, government spending and even net exports is always tricky.

But the number could be shockingly bad, even for those of us that expect a really bad number.