WSJ Economists Survey
The latest Wall Street Journal forecasting survey of economists is out (in the free section of the WSJ). Some of the survey respondents' answers might surprise you:
As the WSJ chart shows, more often than not, economists as a group have underestimated inflation.
19% of economists said inflation poses the biggest risk to the
42% said inflation poses a moderate risk
31% said it was a minor risk.
8% said it poses no risk at all.
Dismal? Hardly. In addition to their chipper view of inflation, as a group, Economists consistently overestimated GDP.
A similar pollyannaish bias: Most of the group underestimated Unemployment, and at the same over-estimated NFP job creation.
Economists are divided on whether commodity prices are at a peak: 51% said “yes,” 49% said “no.”
Here are the probability forecasts for "A Recession will occur over the next 12 months:"
U.S. Economy Hasn't Hit Bottom, Survey Says
WSJ, April 10, 2008
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It's remarkable that 39 % of economist believe that inflation is a miner risk, or no risk at all. This shows just how ignorant many people are to the vicious effects of inflation.
Of all economic concepts, inflation is probably one of the most misunderstood. If one only look at price inflation or core price inflation, it is hard to see that current levels of CPI is a threat to the economy, especially if one look at historic high levels of CPI, as in the 70's.
To gauge the real risk of inflation one has to look at monetary inflation, without which, CPI inflation would be pretty much non-existent.
In reality, monetary inflation can be at significantly high levels at the same time consumer price inflation is low. Irrespective of CPI, monetary inflation does result in the business cycle as interest rates are held at artificially low levels.
By only looking at the obvious, or at "what is seen", ie price inflation, focus from the real problem ie. monetary infaltion is seldom accounted for.
Posted by: Daniel Halvarsson | Apr 11, 2008 9:35:59 AM
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