Economic forecasts: Useful, but almost always wrong
Economic forecasts are useful, writes Len Burman, but you have to account for the fact that they’re usually wrong:
The forecasts are usually off the mark, sometimes by quite a lot. Most recently, CBO forecast 2.3 percent average annual growth for 2008 and 2009. It turned out that the economy contracted by an average of 1 percent per year. The Blue-Chip forecasters similarly underestimated the depth of the recession, which was a factor in the underpowered economic stimulus measures enacted to try to combat the downturn. Everyone also underestimated the expansion of the economy in the 1990s.
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