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New Forecast From NABE 'Professional' Economists
From The Daily Capitalist
Remember the Bushism, "fool me once, shame on -- shame on you. Fool me -- you can't get fooled again." Or ...
The National Association For Business Economics just came out with their latest forecasts for the economy. That's what brought up the old saying, "Fool me once, shame on you; fool me twice, shame on me" that George W. so magnificently bumbled.
Here is what the NABE forecasts:
- U.S. gross domestic product will expand by 3.2% in 2010 and 2011.
- The economy’s potential rate of growth will be 2.8 percent over the next five-year period
- The U.S. savings rate will average 3.4% this year.
- Spending will be helped by a gradually improving labor market.
- Employment gains are expected to remain robust through 2011, except for a slowdown in job creation in the July-September period, when those working on the 2010 decennial Census count will lose their temporary jobs.
- The unemployment rate will fall from 9.9% in April to 9.4% at the end of this year and to 8.5% by the end of 2011.
- Inflation will remain low for longer than in the previous survey.
- A “stagflation” scenario—a combination of slow growth and high inflation—is considered highly unlikely.
- The Fed Funds rate will rise to just 0.5% at the end of 2010.
- The housing sector will not outperform the general economy (a downgraded prediction).
- The dollar will retain much of its recent gains vis-à-vis both the euro and a trade-weighted basket of foreign currencies.
- Greece will default on its debt over the next year. (The survey ended a few days before European governments announced a $1 trillion debt-stabilization fund to prevent the Greek crisis from spreading.)
I guess the big question is: why should we listen to these folks?
Here is what the NABE predicted in February, 2007:
- Moderate economic growth and steady inflation will allow the Federal Reserve to remain on the sidelines throughout 2007 as far as monetary policy goes.
- The NABE is predicting a "Goldilocks economy," one in which neither growth nor inflation is running too hot or too cold.
- Growth in gross domestic product is now expected to average 3.1% over the four quarters of 2007.
- Headline consumer-price inflation will decline to less than 2.0% in 2007, largely as a result of lower oil prices. This would be the lowest inflation rate in five years.
- The "core" inflation rate, which excludes food and energy prices, is expected to hold steady at 2.3%.
- The nation's unemployment rate should average 4.7% this year.
- With moderate growth, steady inflation and stable unemployment, Fed policymakers will choose to keep the federal funds rate steady at 5.25%.
In their February, 2008 forecast they said:
- 55% of NABE economists still believe the country will be able to skate by without falling into an actual downturn.
- GDP will expand by 1.8 percent this year.
- A GDP increase of 2.7 percent for 2009.
- The NABE expects the economy to grow only sluggishly or actually contract from January through June. Then it will expand more strongly in the second half of the year. Helping accomplish that is a $168 billion federal aid plan, with its rebate checks for millions of families, and aggressive interest rate cuts from the Fed.
- The panel of 47 top forecasters thinks “any recession, if it occurs, will be short and shallow.”
- The Fed Funds rate will end 2008 at 2.5 percent
- The Consumer Price Index is forecast to rise by 2.5 percent.
- The jobless rate for 2008 will average 5.2 percent.
- Mark Zandi of Moody's said the economy entered into a recession in December and it will pull out of the downturn in June, aided by the rebate checks that begin going out in May.
As we all know these outcomes were pretty far from the mark. These kinds of predictions are useless exercises and should be ignored. Most of the time these mainline economists can't see beyond their proverbial noses. What they do is look at past quarterly data and then, based on their feelings about how things are going, extrapolate from that a conclusion on what will happen in the future.
If you must listen to anyone, including me, at least consider viewpoints 180° from the mainstream. You have a better chance of success, based on the poor track record of NABE 'professional' economists.
I suggest you listen to Seth Klarman, or David Stockman for a starter. And read the article I just posted by Doug French on contrarian thinking ("Stock Markets, Cycles, and Dopamine").
Michael Panzer at Financial Armageddon just posted an excellent piece ("Alleged Experts vs. Those With Skin in the Game") comparing the upbeat forecasts of the NY and Philadelphia Fed banks with the contrary positions of traders with "skin in the game." Traders see dark clouds and they are putting their money on the line where it counts.
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Actually it should be National Association of Voodoo Economists, otherwise known as the "Naves." I shoulda used that line.
Mark NABE zero.
Ahhhh, Bush. I miss him SOOOOOO much.
Maybe third time will be the charm? Or maybe they are like the little train going up the hill..."I wish I can, I wish I can...." If you wish hard enough it will come true. Their report is filled with fodder for one liners.
Even if unemployment is "only" 8.5% by the end of 2011, I still don't see how Obama doesn't get a challenger for the nomination. I think he's got about 4 months before we start hearing whispers.
One of the only economists you can trust to tell the truth is John Williams at Shadow Government Statistics. When I first learned about Williams, I was astonished to read his older stuff (going back years) in which, to general disdain and hilarity from the Mainstream, he predicted the events which have unfolded in such spectacular fashion.
Lots of his older, free reports (still very relevant even now, by the way, these things take time to unfold!) is available in Primers and Reporting in the Content Index at this address.
www.shadowstats.com
Williams provides a valuable public service with his essential and very high-quality analysis.
John Williams is the go-to-guy alright.
Here are some of his interviews:
http://www.youtube.com/watch?v=w1JWJekeQi8
http://www.youtube.com/watch?v=4Fb7MvIfKFc
What the fekkin heck of a job is a "forecaster" ?? Send them to a mine..that is honest work.
Wow! Happy days are here again! I'm sure Lawrence Yun and NAR will agree...Think I'll go buy a very large house! Now where did I put that phone number for Countrywide???? Hum...must have left it on the nightstand next to my meds and the remote control...Wonder if American Idol is on...
The more things change the more they remain the same..
If traders can use NABE as a dumb money indicator, then NABE predictions are not "useless exercises" at all.
and you know how "hopey, cheery" all those economists always are. never a negative thought with that crowd. now where were we? oh, yeah--"lost in a Roman wilderness of pain and all the children are insane." or how about, "the killer awoke before dawn. he put his boots on. he took a face from the ancient gallery and he walked on down the hall."
Should have been an economics major, apparently results mean little in the economics prediction fortune teller world. More accuracy from a palm reader.
Looking at their board, it seems that NABE is a quasi government organization. It's really a private organization that functions as a government mouthpiece.
Remember, George Carlin said that you should never believe anything the government says, in fact I will take it one step further and say that you should listen to what the government says and then seriously consider that the exact opposite is the truth.
Now how did the story go - Goldilocks and the three 'Bears' I mean.
In the ending it went like this..............
'Just then, Goldilocks woke up and saw the three bears. She screamed, "Help!" And she jumped up and ran out of the room. Goldilocks ran down the stairs, opened the door, and ran away into the forest. And she never returned to the home of the three bears.' Fiction mirroring life
So boys and girls the moral of the story is . Wake the f#%^ Up and head for Safety cause this fairy tale is gunna bite you on the ass if you hang about in the building.
<insert scene from Animal House with Kevin Bacon here>
I can't believe how much time is left until the midterms and how much farther approval ratings can slide. The only tool left in their toolbox is no longer working. And when the lies don't work life as a liar means dead men walking.
Union leadership is starting a war. Crappy reports from NABE are the last of our concerns.
somebody spike their K00l-Aid with way too much hopium