Two Nations: Market vs. GDP, Unemployment

From Christy Romer's JEC testimony:

My hunch is that both real GDP growth and unemployment are likely to be somewhat higher than today's blue-chip forecast predicts.

Two nations; between whom there is no intercourse and no sympathy; who are as ignorant of each other's habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by a different food, are ordered by different manners, and are not governed by the same laws...

Comments

[Dave Wrixon:]

Personally, I think those projections are fanciful, unless they have tallied the statistics already and they are circulating as we blog. Well I guess that's what happens when employees get too zealous.

Oct 23 01:49 PM

[thiazole:]

If someone had posted an accurate prediction of what would occur over the next 7 months back in March, you would have said those predictions were not just "fanciful", but outrageous. What of your world view have you changed that would allow for better accuracy now?


On Oct 23 01:49 PM Dave Wrixon wrote:

> Personally, I think those projections are fanciful, unless they have
> tallied the statistics already and they are circulating as we blog.
> Well I guess that's what happens when employees get too zealous.

Oct 23 02:45 PM

[Dave Wrixon:]

Yes, I would have to say that they are outrageous. Still doesn't mean I actually believe that those are free market prices or that we are in a sustainable recovery, or that any of the statistic can be trusted. But then I did say in my personal opinion.


On Oct 23 02:45 PM thiazole wrote:

> If someone had posted an accurate prediction of what would occur
> over the next 7 months back in March, you would have said those predictions
> were not just "fanciful", but outrageous. What of your world view
> have you changed that would allow for better accuracy now?

Oct 23 03:37 PM

[David Van K...:]

It's probably available somewhere, and I'm too lazy to look it up, but it would be interesting to see what the "Blue Chip Consensi" were for 2009 back in 2008. In other words, do they have any meaningful track record of reliability?

Oct 23 03:50 PM

[thiazole:]

I think they have a pretty poor record. In 2008, they were only forcasting "reduced growth" ahead, and had no clue a major recession was coming (or, apparently that we were even in a recession). From early 2009, I found this quote:

"The Blue Chip economists now forecast a 0.8 percent gain in third-quarter U.S. gross domestic product, down from the 1.2 percent gain they estimated in January. Fourth-quarter growth is seen at 2.0 percent rather than 2.2 percent." from www.reuters.com/articl...

Of course, we don't know what 3rd quarter GDP was yet (we'll get a number next week), but consensus is quite a bit higher than 0.8%.


On Oct 23 03:50 PM David Van Knapp wrote:

> It's probably available somewhere, and I'm too lazy to look it up,
> but it would be interesting to see what the "Blue Chip Consensi"
> were for 2009 back in 2008. In other words, do they have any meaningful
> track record of reliability?

Oct 23 04:17 PM

[thiazole:]

To add to my last post, you have to admit that there is a bit of a Heisenburg Uncertainty Principle involved with a group like this making forecasts. If they had predicted -5% GDP growth for the 3rd quarter, that alone would have changed the actual numbers. In stating their prediction, they effectively change sentiment which alters the actual number.

Oct 23 04:21 PM

[LilBob:]

I would like to see more of where you were trying to go here. This was a very short piece. The comments about two nations just get us back to the fact that we are seeing the return of Social Darwinist ideas where working class people have been rendered analogous to the Deltas and Epsilons in Alduous Huxley's Brave New World. This movement has been facilitated by computers which are incomparable tools for reminding people of "The Policies" and preventing any accidental expressions of humanity or sympathy.

Oct 23 04:37 PM

[VALUEDIV:]

It is true that one can drown in a river with an average depth of 3 feet because it is 10 feet deep in the middle! It is easy to forget the "human misery" factors buried in Statistics that may say that an economy is "partially and sometimes" good here and bad there. Unemployment of 20,000,000 Americans and the destruction of the middle class that took from 1945 to 1975 to build makes for "Hard Times".

We cannot ignore the following icebergs as we sail our economic Titanic forging full engines into the storm! To wit:
(1) The credit card default bubble is coming (2) Followed by a multi-billion dollar derivatives crash that will ensue as a result of Credit Defaults Swaps being called (3) banks are acting with a total disdain for the American worker and for America itself, risk taking multiples and hedging are back
in fashion (4) there exists no enforceable checks and balances of financial actions by "effective" regulations and (5) the American Public is as angry today as the Colonies were in 1776! Public unrest WILL develop if we do not provide immediate jobs in the infrastructure reconstruction of America. We would need steel, wood, food,...,that is stimulating to the economy especially when there are workers with wages.

The main reason no one seems to get it is that unlike the 1930's we have money that we made during the "good times" now being depleted from savings and equity on foreclosures. We still have plastic and the top 5 % echelon of our country are richer than HENRY FORD in 1920!

Please, someone say something. The Founding Fathers would have been "Mad as Hell" and would NOT TAKE IT ANYMORE. Why do we? Perhaps we are still too comfortable at this time. The rest are busy trying to find jobs and keep a roof over their heads. This is not an America we fought for. We need to agree that there is a historic change in our country's destiny. The right "to work for" happiness.

Oct 24 03:53 PM

[E Nuff Sed:]

Keynes understood that employment is Job#1 for governments and widespread unemployment in combination with a lack of social safety net will lead to a revolution.

Oct 24 05:01 PM

[W.E. Heasley:]

Romer’s Unemployment Projections and Multiplier Effect Claim crashed and burned a long time ago.

When Romer, Bernstein and Goolsbee came up with the term “Jobs Saved“, the ultimate Political-Speak, CYA, non-statistic statistic, the Clueless Flag went up the flagpole for all to see.

Final result? The $800 Billion Spruce Goose of all stimulus plans ever concocted.

Plus, the real unemployment rate is north of 16%. Romer is in checkmate.

Oct 25 12:07 AM