Chart of the week: are forecasters being too bullish again?

Chart of countries in recession

There are happy days ahead for the world economy, if forecasts from the International Monetary Fund (IMF) are to be believed. This chart from Deutsche Bank suggests that the number of countries in recession, which soared to nearly 100 during the global financial crisis, is set to decline to record lows over the next few years.

The world’s leading economy, the US, looks in solid shape now that data has improved and the central bank has opted to keep interest rates on hold, according to Deutsche Bank’s Torsten Slok. “We do not see a recession in the next three years.”

Encouraging as this sounds, it is worth remembering that analysts en masse have a terrible forecasting record, with the global crisis of 2009 among their many misses.


Viewpoint

Dow 2,400 anyone? No, that… isn’t a typo. It also didn’t come from one of those clickbait advertisements with a link to overpriced gold coins or even from a noted perma-bear. The notion comes from Stephen Moore, who President Donald Trump plans to nominate for the Federal Reserve Board, during a weekend radio interview…. He predicted “the biggest sell-off in the stockmarket in American history” if Democratic ideas “come into play and enter the White House”. If the Dow Jones Industrial Average merely matched its horrific performance between September 1929 and July 1932, the index would reach 2,400, a level first touched in the 1980s. Historically, the chance of an incumbent failing to keep the White House is only 30%. Unfortunately for those inclined to believe Mr. Moore’s prediction, bookmakers place the odds this time at about 50%.

Spencer Jakab, The Wall Street Journal