Like you I read a certain amount of economic forecasts and share price forecasts. This was especially true when I was creating budgets for the next year- GDP forecasts were one of the few things we could identify to assist benchmark our plans. I scoured research to provide some insight into what the future offered.
Once found, I didn’t take the time to actually verify the quality of sources, I had no idea how accurate they had been the in the past and whether the information was actually useful.
Deutche Bank has done the review work and it shows some ‘interesting’ trends. Those guys being paid to try to forecast what the economy will offer, aren’t so good at forecasting. And while no one is expected to be able to predict the future perfectly because if they were they wouldnt work as an Economist, you would expect a little accuracy.
Unfortunately, according to their own revisions of their forecasts, they tend to be way off. Deutsche Bank’s Torsten Slok charted economists’ revisions to GDP forecasts over time for five periods. If these economists were spot on, then these lines would be straight from left to right.
But as you can see, these lines are rather squiggly.
In addition, we also look to those forecasters to predict share prices and share trends on the US stock exchange… here’s a similar graph on S&P forecast performance through each year for the last 5 years
Yes, agree fully, if they were that good we would never hear from them as they’d be too busy coining money
More and more I read economic forecasts the more depressed it get.