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Senior Member
Posts: 2,018
Reply with quote  #1 
This according to Nobel Laureate in Economics, Robert Samuelson, citing a study from the Federal Reserve.

The basic conclusion:

You knew it all along: Economists can’t forecast the economy worth a hoot. And now we have a scholarly study that confirms it. Better yet, the corroboration comes from an impeccable source: the Federal Reserve.

The study compared predictions of important economic indicators — unemployment, inflation, interest rates, gross domestic product — with the actual outcomes. There were widespread errors. The study concluded that “considerable uncertainty surrounds all macroeconomic projections.”

“Suppose . . . the unemployment rate was projected to remain near 5 percent over the next few years, accompanied by 2 percent inflation. Given the size of past errors, we should not be surprised to see the unemployment rate climb to 7 percent or fall to 3 percent. . . . Similarly, it would not be at all surprising to see inflation as high as 3 percent or as low as 1 percent.”

These are huge margins of error. Clearly, much economic forecasting is guesswork. Worse, the gap between prediction and reality may be widening. The study — done by David Reifschneider of the Federal Reserve and Peter Tulip of the Reserve Bank of Australia — found that forecasting mistakes had worsened since the 2008-09 financial crisis.

Normally, when economic experts are acting humble they invoke the concept of "Black swans", etc.

But, this line of argument basically injects a serious amount of caution, even if the relevant factors are known.

Bruce's predictions about real estate I have tended to find reliable because that's a very specific, limited part of the economy and has considerably fewer moving parts than the overall economy.  

But his most recent prediction about an economic recession in 2 years----which is about our economy as a whole---I'm not quite so sure about that.  Although his intentions are honorable and his statistics quite interesting.  Which is not to say we aren't facing this prospect---of course, this will eventually be true since we can't have an upward economy forever.  But the exact timing of the downturn might be very hard to predict.


Senior Member
Posts: 4,617
Reply with quote  #2 
True but remember this is an analysis of Keynesian macroeconomics, which really doesn't work, as we have demonstrated several times in other threads.

Note there is no mention of correcting the errors of Keynesian econ. or even looking for them.

The reason the Fed and Samuelson use Keynes is not because it it reliable but because it gives them an intellectual basis for using government to manipulate the economy.

Power is more important than Reliability from a government perspective.

"Nothing knits man to man like the frequent passage, from hand to hand, of cash." Walter Richard Sickert
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