One Year Later: A Look Back at "Grim" Economic Outlook
publication date: Feb 23, 2010
Update 2/24/10: Exactly one year ago, I wrote the article below which highlighted the National Association for Business Economics (NABE) outlook for 2009. They predicted that the U.S. economy would shrink by nearly 2 percent. I found in examining their prior year's forecast that they were way off base.
At the time, I said, "Here's my prediction for 2009: this group of economists will be wrong again! These folks tend to be trend followers and they will likely miss on the downside - in other words, the economy may well do better than they expect."
Not suprising NABE was wrong about 2009 GDP. Rather than shrinking about 2 percent as they forecast, the economy expanded ever so slightly 0.1 percent for the year.
AP has blasted out yet another set of economic predictions, this time from the National Association for Business Economics. Their current prediction for 2009 just released says to, "...expect the economy to shrink by 1.9 percent this year, a much deeper contraction than the 0.2 percent dip projected in the fall." (And, I love the headline: Economic Outlook is Grim).
Note first that in the time span of a just a few months, they lowered their 2009 predictions by 1.7 percent. That got me wondering - how good was their prediction of a year ago - back in February, 2008 for the year of 2008?
In that report, here's what they said:
"The economists surveyed look for real GDP, which grew at just a 0.6% annualized rate in the fourth quarter of 2007, to grow at a scant 0.4% rate in the first quarter of 2008, with 1% growth expected in the second quarter....Fiscal and monetary stimulus is expected to boost growth in the second half to a 2.8% annual rate, bringing growth for the year to 1.8% (on a fourth-quarter-to-fourth-quarter basis)..."
Well, for 2008, real GDP shrank 0.2 percent versus the economists' prediction of 1.8 growth (so they were off by 2 percent which is a substantial miss) and growth was better in the first half of the year than in the second half so on all counts, these prognosticators got it wrong.
Of course, AP rarely bothers to examine track records when citing pundit predictions. If they did, they wouldn't publish like 95+ percent of the predictions.
Here's my prediction for 2009: this group of economists will be wrong again! These folks tend to be trend followers and they will likely miss on the downside - in other words, the economy may well do better than they expect.