It’s Time For Everyone to Check Up On Their Crystal Balls

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Neil Irwin praises Goldman Sachs for a year-end report in which it revisited its forecasts from last January:

In this case, the Goldman team did pretty well. Of 10 predictions, they were correct on seven, accurately forecasting, for example, that the economy would not tip into recession in 2013, that the housing market would continue its recovery, that corporate profit margins would stay fat and that inflation would remain low.

Their most clear-cut mistakes were in expecting capital spending to accelerate (it didn’t, rising only about 2 percent, not the 6 percent Goldman economists forecast) and in expecting the unemployment rate to fall only slightly (it fell much more than they expected, because people left the labor force surprisingly fast).

This is a good practice, but I’d add a couple of comments. First, it’s only a good practice if they commit themselves to doing it every year, not just in years when their track record is good. Second, not all forecasts are created equal. Predicting that the economy wouldn’t fall back into recession, for example, isn’t that impressive. There were certainly people last January who predicted slow growth, but there was virtually nobody who thought we were headed back to recession.

But those quibbles aside, this is a worthwhile thing to do. I might even do it myself except that I don’t think I ever made any numeric forecasts that I could check. But maybe I should re-read my January archives and see.

HERE ARE THE FACTS:

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ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

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