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Forecasting business cycles is hard
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- Economists cannot predict the timing of the next recession because forecasting business cycles is hard. For example, at the onset of the 2001 recession, the median forecaster in the Survey of Professional Forecasters (SPF) expected real U.S. gross domestic product (GDP) growth of 2.5 percent over the next year, while in reality output barely grew.
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Economic Insights — Economists aren't soothsayers. They can't pinpoint the start of the next recession. But as Thorsten Drautzburg explains, their models can at least help us understand why a recession is happening, and what can be done about it.
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Economists cannot predict the timing of the next recession because forecasting business cycles is hard. For example, at the onset of the 2001 recession, the median forecaster in the Survey of Professional Forecasters (SPF) expected real U.S. gross domestic product (GDP) growth of 2.5 percent over the next year, while in reality output barely grew.
- Thorsten Drautzburg
- 2019
1 Why Are Recessions So Hard to Predict? Random Shocks and Business Cycles Economists aren't soothsayers. They can't pinpoint the start of the next recession. But as Thorsten Drautzburg explains, their models can at least help us understand why a recession is happening, and what can be done about it. 16 Research Update Abstracts of the latest
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Dec 7, 2022 · Recessions are difficult, but stagnant growth could prove more challenging, Stanford economist warns. While recessions are difficult, they are temporary, says Stanford economist John Cochrane ...
In this article, I review indicators that have proven useful in predicting recessions. The baseline indicator that I examine is the interest rate spread of long-term government bonds over short-term government bonds, which is commonly referred to as the yield curve.
Mar 1, 2023 · Recessions are challenging, but fortunately they don’t last forever. In economic terms, each one reaches a trough, which is the point just before the upward movement begins—like the low point on a roller coaster run, just before the track turns upward.
Sep 26, 2023 · How well can economists predict recessions? To answer this question, we need to distinguish between two properties of a good forecast: accuracy and precision. A forecast is accurate if it is, on average, correct.
