{"id":1158843,"date":"2020-01-08T16:49:21","date_gmt":"2020-01-08T22:49:21","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=108807"},"modified":"2020-01-08T16:49:21","modified_gmt":"2020-01-08T22:49:21","slug":"the-case-against-economists","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1158843","title":{"rendered":"The Case Against Economists"},"content":{"rendered":"<p>This post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/the-case-against-economists\/\">The Case Against Economists<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n<p>Dear Reader,<\/p>\n<p>Whenever despair slumps our shoulders and the sorrows of the world gnaw our liver&#8230; we can rely on CNBC to bring us up:<\/p>\n<p>\u201cLatest Data Show the Economy Ended 2019 on a Strong Note, Putting Recession Fears to Bed.\u201d<\/p>\n<p>Thus we are caressed, soothed, cheered, lifted.<\/p>\n<p>And mortified.<\/p>\n<p>When fear goes to bed&#8230; we vault instantly up from our own, hemorrhaging icy sweat.<\/p>\n<p>That is because danger is highest when the guard is lowest \u2014 when fear dozes and snoozes.<\/p>\n<h2 class=\"centered subhead\" style=\"text-align: center;\"><b>A Jinx?<\/b><\/h2>\n<p>CNBC continues in the same lovely, terrifying vein:<\/p>\n<blockquote>\n<p><i>The fourth-quarter growth scare is a thing of the past, as the U.S. economy looks set to close the books on 2019 with a solid rise.<\/i><\/p>\n<p><i>Manufacturing and trade reports Tuesday confirmed that GDP is on pace to rise more than 2% for the period.\u00a0 An Atlanta Fed gauge estimates the gain at 2.3%, better than the 2.1% in the third quarter and enough to close out the year with [an] average quarterly gain of about 2.4%.<\/i><\/p>\n<p><i>While that would mark a slowdown from the 2.9% increase in 2018, it would still be indicative that the decade-old expansion is alive and well and prepped to continue into 2020.<\/i><\/p>\n<\/blockquote>\n<p>Just so. But we might remind the joymongers that recession is nearly always an invisible menace.<\/p>\n<p>It often comes in on tiptoe\u2026 like a noiseless thief in the night.<\/p>\n<h2 class=\"centered subhead\" style=\"text-align: center;\"><b>The Shockingly Short Route From Expansion to Recession<\/b><\/h2>\n<p>As we have written before:<\/p>\n<p>Periods of jogging, even galloping, growth may immediately precede recession.<\/p>\n<p>We invite you again to consult the following dates. Each reveals the real economic expansion rate \u2014 the economic growth rate adjusted for inflation \u2014 immediately before recession\u2019s onset:<\/p>\n<ul>\n<li>September 1957:\u00a0\u00a0\u00a0\u00a0 3.07%<\/li>\n<\/ul>\n<ul>\n<li>May 1960:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2.06%<\/li>\n<\/ul>\n<ul>\n<li>January 1970:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 0.32%<\/li>\n<\/ul>\n<ul>\n<li>December 1973:\u00a0\u00a0\u00a0\u00a0\u00a0 4.02%<\/li>\n<\/ul>\n<ul>\n<li>January 1980:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1.42%<\/li>\n<\/ul>\n<ul>\n<li>July 1981:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.33%<\/li>\n<\/ul>\n<ul>\n<li>July 1990:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1.73%<\/li>\n<\/ul>\n<ul>\n<li>March 2001:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2.31%<\/li>\n<\/ul>\n<ul>\n<li>December 2007:\u00a0\u00a0\u00a0\u00a0\u00a0 1.97%.<\/li>\n<\/ul>\n<p>(Again we acknowledge Lance Roberts of Real Invest&#x200d;ment Advice for the data).<\/p>\n<h2 class=\"centered subhead\" style=\"text-align: center;\"><b>No Indication of Recession \u201cAnywhere in Sight\u201d<\/b><\/h2>\n<p>Review the figures. You are immediately seized by this strange and remarkable fact:<\/p>\n<p>Recession has followed hard upon jumping growth of 3.07%, 4.02%\u2026 and 4.33%.<\/p>\n<p>\u201cAt those points in history,\u201d Roberts reminds us, \u201cthere was NO indication of a recession \u2018anywhere in sight.\u2019\u201d<\/p>\n<p>Let the record further reflect:<\/p>\n<p>Growth ran 2% or higher immediately prior to five of nine recessions listed.<\/p>\n<p>Third-quarter 2019 GDP came ringing in at 2.1%. And the Federal Reserve projects Q4 2019 will turn in 2.3% growth when the tally comes in Jan. 30.<\/p>\n<p>What was GDP before the last recession \u2014 the Great Recession?<\/p>\n<p>It was 1.97% \u2014 a workable approximation of the rate presently obtaining.<\/p>\n<p>\u201cVery, very few recessions have been predicted nine months or a year in advance,\u201d affirms economist Prakash Loungani.<\/p>\n<p>Adds George Washington University economist Tara Sinclair:<\/p>\n<p>\u201cThere\u2019s no economic data or research or analysis that suggests we can look 12 months into the future and predict recessions with any confidence.\u201d<\/p>\n<p>The facts are with them\u2026<\/p>\n<h2 class=\"centered subhead\" style=\"text-align: center;\"><b>A Failure Rate Second to Few <\/b><\/h2>\n<p>The world has endured 469 downturns since 1988. How many did the IMF see coming?<\/p>\n<p><i>Four. <\/i><\/p>\n<p>This we have on authority of one Andrew Brigden, chief economist at Fathom Consulting.<\/p>\n<p>But perhaps IMF economists are uniquely blinded and botched. Their private-sector brethren may enjoy superior vision. Private-sector economists are, after all, closer to the field of action.<\/p>\n<p>But the record indicates private-sector economists are equally sightless, equally unable to penetrate the fog of data that surrounds them.<\/p>\n<p>Between 1992 and 2014\u2026 153 combined recessions came to 63 countries the world over.<\/p>\n<p>How many recessions did private-sector economists spot coming \u2014 as a whole?<\/p>\n<p>Five.<\/p>\n<p>What is more, these bunglers generally undershoot recession\u2019s severity.<\/p>\n<p>Do we condemn the erring and wayward vision of professional economists, their phantom vision?<\/p>\n<p>No. We question their value, certainly. But we do not condemn them.<\/p>\n<h2 class=\"centered subhead\" style=\"text-align: center;\"><b>\u201cA Bedlam of Unpredictability\u201d<\/b><\/h2>\n<p>The economy is a bedlam of unpredictability, an infinitely complex Rube Goldberg contraption \u2014 a chaos of billiard balls in endless and delirious collision.<\/p>\n<p>Try to keep track of it&#8230;<\/p>\n<p>A cue ball goes careening into a rack. A six ball lights out in one direction. A nine ball strikes out in a second, a four ball in a third&#8230;<\/p>\n<p>A three ball goes knocking into an 11 ball, a two ball into a seven ball, a one ball into a 14 ball, a five ball into a 12 ball, a 13 ball into an eight ball, a 10 ball into a 15 ball&#8230;<\/p>\n<p>Each in turn shoots in a random direction. Each then runs into another previously sent on its own indeterminate course.<\/p>\n<p>Another dizzying chain reaction begins\u2026 with its own set of imponderables.<\/p>\n<p>Into which pocket will each ball drop ultimately?<\/p>\n<p>The answer is not only difficult to determine at the outset. It is impossible to determine at the outset.<\/p>\n<p>The number of variables is endlessly boggling.<\/p>\n<p>And so the economic outcome is impossible to determine too far out. And for the same exact reason.<\/p>\n<p>As well hazard the winner of the 2096 presidential election\u2026 the number of angels that can fit on a pinhead\u2026 or the precise number of rocks in a senator\u2019s skull.<\/p>\n<p>Besides, we are in no position to mock the faulty psychic eyesight of economists&#8230;<\/p>\n<h2 class=\"centered subhead\" style=\"text-align: center;\"><b>A Prediction, Horribly Failed<\/b><\/h2>\n<p>That is because our own crystal gazing gives a consistently false image. For instance:<\/p>\n<p>Roll back the calendar \u2014 to last Jan. 3.<\/p>\n<p>The stock market had just come within one whisker of correction, defined as a 20% stagger.<\/p>\n<p>We believed the curtain was coming down at last. We divined the Dow Jones would close 2019 at roughly 18,000&#8230; and the S&amp;P near 2,000.<\/p>\n<p>But we underestimated the Federal Reserve\u2019s ferocious response and the vast pull of its magnetism.<\/p>\n<p>Jerome Powell went into his trick bag. And our apocalypse went into oblivion&#8230;<\/p>\n<p>The Dow Jones concluded the year above 28,500; the S&amp;P above 3,200.<\/p>\n<p>This year we tempted fate further yet. That is, we came out flat-footed with a prediction of the future, 10 years out.<\/p>\n<p>We claimed the S&amp;P will end this newly hatched decade between 1,500 and 2,300.<\/p>\n<p>Today it floats at 3,265.<\/p>\n<p>We claimed additionally the Dow Jones will be similarly trounced percentage wise.<\/p>\n<p>Bulls, take heart! You need only glance at our record if concerned.<\/p>\n<p>But come back home\u2026<\/p>\n<p>Few respectable economists forecast recession this year \u2014 or a stock market calamity.<\/p>\n<p>And look at their record&#8230;<\/p>\n<p>Regards,<\/p>\n<p>Brian Maher<br \/>\nManaging editor, <i>The Daily Reckoning<\/i><\/p>\n<p>The post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/the-case-against-economists\/\">The Case Against Economists<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/the-case-against-economists\/\">The Case Against Economists<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n<p>Uh-oh &mdash; CNBC says the economic expansion is &ldquo;alive and well&rdquo;&#8230;<\/p>\n<p>The post <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/the-case-against-economists\/\">The Case Against Economists<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/dailyreckoning.com\/\">Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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