Friday, May 27, 2011

So Much For the Prognosticators

Month after month, we're told that this or that figure or statistic falls outside of the range of our most learned mainstream economic prognosticators. When they predict that things will improve, they usually don't. When they predict that we should expect a downturn, the statistics don't come out half so bad.

Take, for example, these two forecasts featured in an article from Bloomberg.
More Americans than forecast filed applications for unemployment benefits last week, a sign the labor market is struggling to gain momentum.

Jobless claims increased by 10,000 to 424,000 in the week ended May 21, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 404,000.

and

The U.S. economy, the world’s largest, expanded at a 1.8 percent annual rate in the first three months of this year, Commerce Department figures showed in Washington. The revised rise in gross domestic product was the same as estimated last month and compared with a 3.1 percent gain in the prior quarter. The median forecast of economists surveyed by Bloomberg called for a 2.2 percent increase...
What are we to make of these consistent missed predictions? Are the people making them simply not very bright? Are they misleading the public on purpose? Why are they habitually wrong?

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