Why are Economists so Bad at Forecasting Recessions

July 30, 2019

The financial press has had articles predicting a recession since the 2008-09 Great Financial crisis – at that time is was going to be a double dip recession (because they didn’t correctly predict the recession that actually happened in 2008) – but the second “dip” never came – and we are now 10 years (give or take) into an expansion cycle.

Since we know markets are cyclical, we are expecting a recession ( defined as a quarter or more of negative growth as measured by Gross Domestic Product) But note that Australia hasn’t had a recession in 30? Years – their economy goes through periods of strong and weak growth – but no negative growth. This article gives us some reasons why forecasts aren’t worth doing anything about.