Monday, February 1, 2016
The Stekler Award is named after the famous forecasting expert and academic Herman Stekler who believes that recessions should be forecast “early and often.” In practice, recessions are almost never forecast in advance. The Economist recently re-discovered this long-standing finding and highlighted the poor record of the IMF in forecasting recessions. The record of other public institutions or the private sector is just as poor. For instance, see the charts below on forecasts made by the IMF, OECD and the private sector (labeled ‘CF’ in the charts) over the course of 2009—each point shows the forecast for a particular country. The forecasts are virtually identical. And the forecasts for recessions (negative growth) were not made in advance by any of the sources.
The race is on for the 2017 award. Suggestions are welcome and can be sent to firstname.lastname@example.org. The Stekler Award recognizes forecasts that depart significantly from the consensus view. Predictions need not be restricted to forecasts of recessions but they must be specific (so “oil prices will rebound someday” doesn’t cut it) and well reasoned (so no “we have been on the path to doom which is bound to come one day”-type of forecasts).
We mined a recent article in Politico to see if we could get some front runners for the 2017 award. There were a range of predictions, some quite clever (Dean Baker predicted that during 2016, unlike 2015, oil prices would not fall another $60 a barrel), some specific (Ann Harrison predicts that “India will replace China as the leading destination for foreign investment” in 2016), most quite gloomy. On the U.S. economy in 2016, most experts surveyed stuck to the center, though Robert Reich said: “I expect the U.S. economy to sputter in 2016”; if he’d been a little more specific he ‘coulda been a contender’.
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