Economists – not the best recovery forecasters
This post is a guest contribution by Rebecca Wilder*, author of the News N Economics blog.
I wrote an article some time back about the pathetic recovery expected by economists. In that article, Spencer (of Angry Bear) gave the following comment (please read the entire comment, as Spencer’s argument is not represented here in full):
“Maybe this time will be different and we may actually have a weak recovery, but just remember that economists have a long and repeated history of underestimating the strength of recoveries.”
I myself did not know that economists have a very good track record of undershooting recoveries. However, I did a little digging through old files at work and found Blue Chip forecasts around the end of the 1981-1982, 1990-1991 recessions, and a DRI forecast (now known as Global Insight, couldn’t get Blue Chip) at the end of the 2001 recession (recession end determined much later by the NBER). The forecast way undershot the actual growth rate for the first year of recovery in two of the last three recessions – by 2.3% in the 1983 recovery!
Ahem. Don’t be too surprised if they mess it up again!
Source: Rebecca Wilder, News N Economics, August 15, 2009.
* Rebecca Wilder is an economist in the financial industry. She was previously an assistant professor and holds a doctorate in economics.
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