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 Economic Forecasters Miss Again as the Economy Leaves Them Behind

Dec. 15, 2017

by Bob Adelmann

Just how do economic forecasters justify their existence, and their paychecks? George Carlin found a way: he became a comedian. He said “the weather forecast for tonight: dark.”

Yogi Berra was already financially secure, so he could get away with this: “Forecasting is very difficult, especially when it involves the future.”  Economist John Kenneth Galbraith made a living selling books touting his progressive and Keynesian eyewash, so he could be forgiven for telling the truth: “The only function of economic forecasting is to make astrology look respectable.” Astrology (not to be confused with astronomy!) is the study of celestial objects in an attempt to forecast the future.

How could current seers miss the mark by so much? The Commerce Department reported on Thursday that retail sales for November jumped 0.8 percent ahead of October, while October was revised upward from 0.1 percent to 0.4 percent. Forecasters were predicting a 0.3 percent jump in November. In a $20 trillion economy, two-thirds of which is dedicated to meeting the demands of retail shoppers and consumers, those are multi-billion dollar misses. And yet someone is paying these sages.

The “core” retail sales (excluding automobile sales) number is even more astonishing: up a full percentage point in November with forecasters predicting just 0.7 percent. Even better – or more embarrassing, if you will – November’s retail sales are nearly six percent ahead of last year’s November numbers.

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