Source: WSJ

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Surprise! The WSJ reports that Economists are bad at forecasting:

Simply put, 2011 was a terrible year for economic prognostication. With seemingly no end of overseas disasters — natural and man-made — to throw off experts’ predictions, it’s hardly surprising that this year’s winning score would only have been good for 35th in last year’s rankings.

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Source:
Why Did Economists Get It So Wrong in 2011?
Ben Casselman
Real Time Economics February 13, 2012
http://blogs.wsj.com/economics/2012/02/13/why-did-economists-get-it-so-wrong-in-2011/

Rosier View Has Familiar Ring
BEN CASSELMAN and PHIL IZZO
WSJ, FEBRUARY 13, 2012
http://online.wsj.com/article/SB10001424052970203824904577215143354029590.html

Category: Economy, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Surprise! Economists Are Not Good At Forecasting”

  1. OveS says:

    It is difficult to guess where the government wants to set the numbers. How actual is “Actual”?

  2. MikeDonnelly says:

    The output gap equation in our model suggested a bigger snap back in 2011, Real GDP over the last 10 years has been 1.6%, (heck even excluding 2009 has been 1.8%) Want a long conversation? Ask an economist what potential GDP is in the US, back in the 90s we were thinking 3+, lately 2.0% is cause for rejoicing. Clearly the output gap is not as large as we think, otherwise 2011 should have been over 2 as a slam dunk. Something is wrong, and I don’t just mean lately. I suspect productivity has been lousy for 10+ years, question is why.

  3. mark says:

    Depends on how you define good. A negative correlation can be just as valuable as a positive one. Whenever I read “The consensus of economists is that…” I sit up and take notice because it so likely to be exactly wrong,

  4. Moe says:

    I’d love to see a forecasting comparison with weathermen. My money is on the weathermen…economists 15 minutes ended a while ago – enuff already with the economists!!!!!!!

  5. romerjt says:

    Why doesn’t somebody load their predictions into a database or spreadsheet and have them print their batting averages with their next article – full disclosure.

  6. Finster says:

    The entire “output gap model” is challenged by the enormity of the real estate bubble. In Austrian economist’s terms I would say “the economy of the real estate bubble collapsed and that very economy shouldn’t exist.” The bigger the divergence from a sustainable economy was, the less underused, but viable economy is present as output gap.

    Unviable economy is not an output gap. It’s creative destruction and has to be reinvented and redeployed in a much more lengthy and costly manner. It all comes down to neo classic economic theory not having a complete theory of capital (and its obsoletion).

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