Economists – not the best recovery forecasters
Posted By Prieur du Plessis On August 15, 2009 @ 10:29 am In Economy,Guest Bloggers | 3 Comments
This post is a guest contribution by Rebecca Wilder*, author of the News N Economics [1] blog.
I wrote an article some time back about the pathetic recovery [2] expected by economists. In that article, Spencer [3] (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 [4]). 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!
[5]
Ahem. Don’t be too surprised if they mess it up again!
Source: Rebecca Wilder, News N Economics [6], August 15, 2009.
* Rebecca Wilder is an economist in the financial industry. She was previously an assistant professor and holds a doctorate in economics.
Article printed from Investment Postcards from Cape Town: http://www.investmentpostcards.com
URL to article: http://www.investmentpostcards.com/2009/08/15/economists-%e2%80%93-not-the-best-recovery-forecasters/
URLs in this post:
[1] News N Economics: http://www.newsneconomics.com/
[2] pathetic recovery: http://www.newsneconomics.com/2009/07/shape-of-recovery-pathetic.html
[3] Spencer: http://angrybear.blogspot.com/2008/02/about-angry-bear.html
[4] NBER: http://wwwdev.nber.org/cycles/cyclesmain.html
[5] Image: http://www.investmentpostcards.com/wp-content/uploads/2009/08/rw150809b.jpg
[6] News N Economics: http://www.newsneconomics.com/2009/08/economists-not-best-recovery.html
[7] Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.: http://www.feedburner.com/fb/a/emailverifySubmit?feedId=921608&loc=en_US
[8] (What's this?): http://www.wikinvest.com/blogger/wikinvest_wire
[9] What Are the REAL Economic Indicators Saying?: https://www.wallstreetdaily.com/2012/02/06/what-are-the-real-economic-indicators-saying
[10] Economic Indicators Remain Mixed, But are Showing Improvement: http://www.moneymorning.com/2009/06/12/report-predicts-recession-ending
[11] Leading Economic Indicators Make Largest Gain Since 2004: http://www.moneymorning.com/2009/06/19/leading-economic-indicators
[12] U.S. Economic Cycles: http://www.wikinvest.com/concept/U.S._Economic_Cycles
[13] Wikinvest: http://www.wikinvest.com
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