“For mature and well-understood economics such as that of the United States, consensus forecasts are not notably biased or inefficient. In cases where they miss the mark, this can usually be attributed to issues of insufficient information or shocks to the economy.”
Maybe it’s the allure of alarmism, but aren’t we mostly concerned with predicting catastrophe? This is kind of like saying you can predict the weather except for typhoons and floods.
Maybe it’s the allure of alarmism, but aren’t we mostly concerned with predicting catastrophe? This is kind of like saying you can predict the weather except for typhoons and floods.
I think the analogy goes the other way. A weather forecast that didn’t cover catastrophes would still be useful. I like knowing if it’s going to be rainy or sunny, wet or dry.
Similarly, I find it useful to know in a general sense which way short-term interest rates are going, how much inflation to expect over the next few years, and whether the job market is getting better or worse from quarter to quarter.
Yes, sometimes there are external shocks or surprising internal developments, but an imperfect prediction is still better than none.
Except that the shocks usually have a disproportionate effect on the economy. The forecasting is useful, but any strategy contingent upon the forecasting will have to take into the account that when your forecasts fail, it won’t just be a little, it will be massive.
“For mature and well-understood economics such as that of the United States, consensus forecasts are not notably biased or inefficient. In cases where they miss the mark, this can usually be attributed to issues of insufficient information or shocks to the economy.”
Maybe it’s the allure of alarmism, but aren’t we mostly concerned with predicting catastrophe? This is kind of like saying you can predict the weather except for typhoons and floods.
I think the analogy goes the other way. A weather forecast that didn’t cover catastrophes would still be useful. I like knowing if it’s going to be rainy or sunny, wet or dry.
Similarly, I find it useful to know in a general sense which way short-term interest rates are going, how much inflation to expect over the next few years, and whether the job market is getting better or worse from quarter to quarter.
Yes, sometimes there are external shocks or surprising internal developments, but an imperfect prediction is still better than none.
Except that the shocks usually have a disproportionate effect on the economy. The forecasting is useful, but any strategy contingent upon the forecasting will have to take into the account that when your forecasts fail, it won’t just be a little, it will be massive.