Three months ago, when looking at the predictive track record of US economists, we said [3]that "if PhD economists were serious about getting things right, they would have a tough job. That goes double for PhD economists charged with making policy decisions based on their conclusions."
We furher explained that’s because economics (like sociology and political science and astrology) isn’t a real science. It’s a pseudo-science. And as is the case with other pseudo-sciences, it’s flat out impossible to discover laws and immutable truths, no matter what anyone told you in your undergrad economics course.
Back then we were specifically looking at economist's predictions about the Fed's first rate hike, which based on a WSJ survey of "respected" economists, nearly 95% said the Fed would hike by September.
[4]
It did not... once again showing just how truly clueless about a binary event a short 9 months in the future, economists truly are.
* * *
Where are we now? Here is the latest WSJ poll [5]:
About 92% of the business and academic economists polled by The Wall Street Journal in recent days said they expected the Fed to raise its benchmark federal-funds rate at its Dec. 15-16 policy meeting. Some 5% said the Fed would stay on hold until March and 3% predicted the Fed would keep rates at near-zero even longer.
Charted:
[6]
To summarize: in January, 95% of economists were wrong in their forecast about a binary event 9 months into the future.
And now we have an even better bogey: should the Fed not hike rates on December 16, then we will know with certainty that over 90% of economists are unable to accurately forecast a simple yes/no event, which is due to take place in just over a month.
No pressure.
We, for one, can't wait: should Yellen pull the rug on everyone again, it won't be the Fed whose credibility will be terminally crushed: it has been for years. It will be that of the army of Fed sycophants, the sad souls whose job it is to perpetuate a failed and dying system, known as economists.
