Chart of the week: Economists’ unblemished record of failure

Global GDP change

In 2001, Prakash Loungani, an economist at the International Monetary Fund, surveyed the accuracy of economic forecasts throughout the 1990s. They were useless. “The record of failure to predict recessions is virtually unblemished,” he concluded.

Now Loungani has updated his research to the past few years, and economists’ “record of failure remains impressive”, as Tim Harford notes in the FT. He looked at data for 77 countries, of which 49 fell into recession in 2009.

Economists had not called a single one of these recessions by April 2008, even though the news was full of the ‘credit crunch’, and Northern Rock and Bear Stearns had collapsed. “It did not take a genius to see trouble was on the way.”

Yet, even in September 2008, the consensus remained that no country would suffer a contraction. By September 2009, analysts had got the message, but then went overboard the other way: 54 recessions were predicted, five more than there actually were.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12