The Unassuming Economist

The 2016 Stekler Award for Courage in Forecasting goes to Michael (“Mish”) Shedlock. At the start of 2015, the blogger popularly known as “Mish” had predicted recessions in Canada and the United States during 2015. While these events did not come to pass, enough anxiety was generated about the health of these economies over the course of the year that Mish deserves some credit for anticipating a degree of weakness that was not being widely talked about at the start of last year.

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 ploungani@gmail.com. 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’.