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Majority of professionals got the timing of the economic downturn dead wrong; why is this?
BLOOMBERG: ECONOMISTS MISSED ALL THE SIGNS OF A COMING RECESSION
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Which of two groups—economists or the general public—came closer to predicting the recession? Surprisingly, it looks like the Joe Six Packs of the world were better economic prognosticators than the elbow patch set.
In November 2007, a Gallup public opinion poll found 54% of Americans believed a recession would probably or definitely occur in the next 12 months.
By comparison, a Wall Street Journal survey of 52 economists conducted two weeks later found that, on average, the professionals put the chances of a recession at 38%.
In reality, the longest recession in at least 26 years began in December 2007, almost immediately after the two surveys were conducted.
A majority of the public got it right. Many economists did not.
“This recession, economists have done even worse than usual,” said Franklin Allen, co-director of Wharton Financial Institutions Center at the University of Pennsylvania. “They muffed predicting the crisis.”
[SNIP]
Even more galling to some observers, though, was the failure of the Bush administration, including Mr. Bush himself, to acknowledge the downturn well into this year.
“They did not awake to the recession risk until it was well underway,” said Lakshman Achuthan, managing director of the Economic Cycle Research Institute.
