By Betsey Stevenson and Justin Wolfers – Here’s something you don’t often hear an economist admit: We have very little idea where the economy will be next year. Truth be told, our best guesses just aren’t very good.
The dismal science is more dismal and less science than most people recognize. Careful studies by both Federal Reserve economists and the Congressional Budget Office have found that forecasts of the next year’s economic-growth rate typically miss by about one percentage point, and often more. Unemployment forecasts aren’t much better.
Why? Data are imperfect. Theories are coarse. Models oversimplify. The economy is constantly evolving and can’t be subjected to controlled experiments. Economic cycles are infrequent, so our understanding of them necessarily proceeds very slowly. more> http://is.gd/yVxZpT
- Fault lines in global economy widen (business.financialpost.com)