By Christopher Harper
If you turn back the clock six months to the end of May, the “experts” predicted gloom and doom for the U.S. economy.
The key piece of information was the yield gap between three-month and 10-year Treasury bonds reach a low of minus 13 basis points. According to the “experts,” the gap forecast a recession.
Almost every talking head chirped on every cable outlet: Recession, recession, recession.
Fast forward to the current economic mood: Unemployment to record low levels. Jobs up. Consumer confidence up. Productivity up.
The disconnect between the facts and the “experts” even had The Wall Street Journal wondering: What would we do without experts?
The report noted that the “experts” had failed to predict that employers added 266,000 jobs in November—the fastest pace since 312,000 in January—and the jobless rate dipped to 3.5%, matching September as the lowest level since 1969. Wages also advanced 3.1% from a year earlier.
The “experts” were nonplussed. Even DaTimes acknowledged that many of the “experts” got it wrong.
“The mainstream view of the economics profession — held by leaders of the Federal Reserve, the Congressional Budget Office, private forecasters, and many in academia — was that the United States economy was at, or close to, full employment.”
The “experts” got it wrong by a full one percent, arguing that 4.7 was as good as it could get. The workforce prediction was off by more than one million people.
Fortunately, consumers and small business owners haven’t followed the advice of the “experts.”
Americans’ view of the economic outlook improved significantly in December, according to a University of Michigan consumer-sentiment survey. The University of Michigan’s gauge of consumer sentiment rose to a December reading of 99.2 from a final November reading of 96.8. Economists had expected a December reading of 96.9.
I guess we can add economists to the list of experts who can’t be trusted. That list already includes political analysts, sports commentators, and climate-change advocates.
One final note: We lost a true expert when Paul Volcker died this week. As chairman of the Federal Reserve under Carter and Reagan, he was responsible for bringing the country out of a deep recession and for stopping rampant inflation.