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What’s It Take For Economists To Forecast U.S. Recessions Accurately?
Getting a job as a Wall Street economist is supposed to require great skill. But apparently that skill doesn’t mean developing the ability to forecast big events like recessions.
A year and a half after the ‘recession call’ started and we still have no recession. In fact, the U.S. is now growing faster than it has in ages. It flies in the face of the collective message from Wall Street. And that has me wondering what’s up.
Most economists on Wall Street have multiple degrees in economics, often from high-priced universities. They’ve learned the ins and outs of ridiculously complicated mathematics that is meant to support their findings.
Yet, in the middle of 2022, the average Wall Street economist told us that the U.S. was facing an imminent recession. This recession, they said, would be deliver promptly because the Federal Reserve was raising the cost of borrowing money.
It hasn’t happened. Yet some people keep pushing the same narrative. For instance, Bond King Bill Gross says without a doubt that there will be a recession in the fourth quarter, according to a Fortune magazine story. I have no idea whether he’ll be correct, but we’ll no doubt see in a few weeks.
Another economist said we actually did have a recession earlier this year but nobody noticed, according to a report in Fortune. There are so many smart-ass remarks that could be made here, so I won’t, other than to say how much of a recession was it if no-one noticed? Maybe it’s what they call a technical recession of two back-to-back quarter of negative growth.
Third Quarter Boom Busts Recession Call
The latest data also flies straight in the face of recession forecasts. The advanced-reading for Gross Domestic Product for the third quarter was annualized growth of 4.9%, according to data collated by the Briefing.com website.
That recent growth is roughly double the growth rate for the preceding four quarters which grew between 2.1% and 2.7%. And yes there were multiple issues under the hood to debate for every one of those quarters. But still, Captain America seems to have knocked the ball out of the park.
