It’s The Economy, Stupid (AKA Economists)

the economists in this survey thought that GDP would end up at about 2.4 percent in 2008, slightly below its long-term trend. This was a very bad forecast: GDP actually shrank by 3.3 percent once the financial crisis hit. What may be worse is that the economists were extremely confident in their bad prediction. They assigned only a 3 percent chance

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A second crisis was economic, or to be more precise financial, triggered by years of irresponsible mortgage lending, high-risk investments, and inadequate regulation of banks and other financial institutions in the United States and Europe. These practices came home to roost in 2007 and 2008, and it was not long before the crisis grew dramatically

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In fact, the actual value for GDP fell outside the economists’ prediction interval six times in eighteen years, or fully one-third of the time. Another study,18 which ran these numbers back to the beginnings of the Survey of Professional Forecasters in 1968, found even worse results: the actual figure for GDP fell outside the prediction interval al

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