Thursday, April 16, 2015

Analysts Were Looking For a Number.....

that was [higher, lower] than actual [earnings, jobs created, unemployment rate, trade deficit, last quarter's GDP growth, etc.].

For example, the first Friday of the month (April 3, 2015) "New Jobs Created Report" for March fell dramatically short of consensus estimates.  Not a single prominent business or academic economist has stepped forward to claim an accurate forecast. Dozens of business and academic forecasters that were wildly inaccurate scrambled to find reasons why they were so off-target.

And yet, the Congressional Budget Office, Treasury, Office of Management and Budget, Social Security Trustees, private business forecasters, and professors routinely issue 1, 2, 5, 10, all the way up to 75-year forecasts of economic activity, government expenditure, unemployment rates, and so forth.

Reporters, pundits, and media personalities then report these forecasts with few qualifications about their future accuracy or inaccuracy as events unfold and new real-time data are released.

Any wonder that the federal government and most professional economists missed the Great Recession and financial crisis that erupted in 2008!  The forecasting community cannot get next month right, but have no problem issuing long-term projections.  Were John McEnroe a pundit, he would say "You cannot be serious!"

So please take every political candidate's statements on how their proposals will increase growth, reduce inequality, reduce deficits, improve middle-class wages, and so on with mountains of salt. Their promises are as accurate as next month's jobs report!





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