Sometimes a picture really does tell a thousand words. Here’s a chart, based on data from the Philadelphia Fed, showing actual economic results compared to the predictions of professional economists. As you can see, my profession does a wretched job. Comparisons based on predictions from the IMF, OECD, CBO, and OMB doubtlessly would generate equally embarrassing results. This does not mean economists are idiots (insert obvious joke here), but it is an additional reason why Keynesianism is misguided. If economists are unable to predict what’s going to happen with the economy in the near future, why should we expect anything positive when politicians tinker with short-run economic performance? That’s especially the case when they pass so-called stimulus legislation that increases the burden of government spending.
h/t: James Montier, via Paul Kedrosky, via Andrew Sullivan
What’s interesting in this, is that the biggest divergences are all overlooked market plunges. It suggests a serious case of rose-colored glasses.
[...] 28, 2010 by Dan Mitchell I posted an amusing (and disappointing) graph in January showing how economists consistently failed to predict major changes in GDP. Russ Roberts [...]
[...] look very good with the benefit of hindsight, but economists are notoriously awful forecasters, as I’ve noted before. Moreover, Krugman legitimately could argue that his advice was for the specific circumstances of [...]
[...] look very good with the benefit of hindsight, but economists are notoriously awful forecasters, as I’ve noted before. Moreover, Krugman legitimately could argue that his advice was for the specific circumstances of [...]
[...] economists are lousy at predicting the future, that’s a legitimate [...]
[...] economists are lousy at predicting the future, that’s a legitimate [...]
[...] economists are lousy at predicting the future, that’s a legitimate [...]
[...] economists are lousy at predicting the future, that’s a legitimate [...]
[...] would have at least managed to get back to a semi-decent level of growth. More confirmation that economists are lousy forecasters. Rate this: Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike [...]
[...] I’ve already pointed out that economists are lousy forecasters. [...]
[...] a list of predictions. But I won’t try to predict the economy. As I already have explained, economists are lousy short-term forecasters. If we actually knew what was going to happen, we’d be [...]
[...] important to understand that I’m not blaming him for making bad predictions. After all, economists are lousy forecasters. I blame him for peddling the silly Keynesian theory that bigger government boosts economic [...]
[...] P.S. Never forget that economists are lousy forecasters. [...]
[...] in 2010, I shared a remarkable graph comparing the predictions of economists to what actually [...]
When I was in college we learned about business cycles. They went up and down and always resembled a sign graph.
Where are the ups and downs of the business cycles in their predictions?
[...] in 2010, I shared a remarkable graph comparing the predictions of economists to what actually [...]
It doesn’t have a label for the y-axis…so it doesn’t really mean anything.