JACKSON HOLE, Wyo. -- And today we confirm that most economic forecasters are horribly overpaid.
Every three months, the
asks 30 or so seers what they think
gross domestic product
will do next quarter. The most recent Philly forecasts, alongside what GDP actually ended up doing, are presented in the table below.
Is that not downright unbelievable?
Underestimation during 11 of the past 13 quarters.
Not one forecast as big as 3% until the first quarter of this year.
Forecast errors of 2 percentage points or more six times since 1996.
The numbers that appear in the table above aren't even really forecasts.
They're second chances.
They're revised numbers that the forecasters provide
one full month
into the quarter they're estimating.
they miss by as much as 3.6 percentage points.
And keep in mind that many of the people behind sissy forecasts like these spend much of their time screaming that the Internet and a marked and permanent acceleration in productivity mean that the economy can grow faster than it ever could before.
And keep in mind that many of the people behind sissy forecasts like these reckoned that the world was ending last autumn -- they grudgingly marked up their 1% (and even recession) forecasts for the fourth quarter only when the incoming data finally forced them to -- and that they now still have the gall to profess worthwhile knowledge about what the economy will do over the remainder of the year.
You're Worth the Whole Damn Lot of Them
There are people out there worth listening to. The
Salomon Smith Barney
forecasters rock. Ditto the
Lombard Street Research
(a London-based shop) does solid work. And Paul Kasriel at
, Mike Englund at
MMS Standard & Poor's
and Diane Swonk at
are all outstanding.
These folks reckon (as a group) that the second-quarter GDP number to be released July 29 will print somewhere in a 3.8%-to-4.4% range.
And, unlike the sissy estimates of some of their colleagues (see table above), they were saying as much well before the quarter actually began.
Are they right about everything? All of the time?
But they don't fall for all of the conventional crap and instead dig around in the dirt.
They're loaded with common sense, and they think.
And even better, they'll make you think.