Who has the best job in the world?
No, not a drummer in a rock and roll band.
An economist.
Who else gets paid to make wild predictions about the future, then never be held responsible, if things don’t turn out the way they say?
I spend a lot of time reading the opinions of economists. My favorite guy is Mark Zandi, Chief Economist over at Economy.com. He seems smart, logical, reasonable.
That doesn’t mean he always gets things right.
Nor do other economists.
From today’s Journal:
Economists predict the risk of a recession to be 36 percent, up from 28 percent a month ago, according to a Wall Street Journal online poll.
Those surveyed were split, however. Eleven economists said there was at least a 50 percent chance. On the other end, 13 economists said the chance of a recession was lower than 30 percent.
Economists who believe that a recession is inevitable say that the current magnitude of housing declines rarely occur except when there is a recession. Steve East, chief economist at Friedman, Billings, Ramsey & Co. Inc., who predicts a 60 percent chance of recession ….
What does that even mean?
I don’t think it makes any sense.
I think the economists should have been asked one simple question: Do you think there is going to be a recession, yes or no? And, a second question: Why or why not?
Comparatively, the people over at The PMI Group at least explain their methodology. To make their most recent predictions of housing price changes, they weighed several factors, “foremost among these factors are historical changes in house price volatility, housing affordability, and local employment trends.”
But, of course, it’s an inexact science to use existing data to predict what may or may not happen, right?
Meaning, previous results are not indicative of future behavior.
Economists Up the Odds for Likelihood of Recession – By Sudeep Reddy, The Wall Street Journal, by way of Realtor.org
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