Don’t Bet On Anyone’s Forecast

If you want to be thoroughly befuddled about where the US economy is going, just ask three or more forecasters. Any experienced professional who tells you that he or she is quite positive about the path of the US or global economy over the next two or three years should be looked at with a very jaundiced eye.

In a recent survey of 43 forecasters, only eight of us did not have negative numbers for real GDP this quarter and two of these people had a highly improbable (it’s only happened once in our 237 quarters of history) 0.0 as their prediction. For the thrid quarter, only 11 people had a negative number and only four people expected a negative number for the fourth quarter of 2009.

Over the year ending in March 2010, the range was from a drop of 1.9 percent to an increase of 3.2 percent. That’s my forecast and I’m sticking to it, but you should be aware it’s one of the most optimistic out there.

A similar split showed up in the survey released by the National Association for Business Economics (NABE). There were 45 of us in this panel. The median forecast was for a drop of 1.8 percent this quarter and increases of 0.7 percent and 1.8 percent for the third and fourth quarters respectively. The five lowest forecasts were for -4.2 percent, -1.8 percent and 0.0 percent for those three quarters. The five highest were 2.8 percent, 3.3 percent and 4.0 percent for the same three quarters. That’s a huge split. Click here to read the full post and comment (Insights subscribers) »