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Wednesday, 2 September 2009

Soothsayers, shamen, economists and other frauds

It is interesting to look at the other pink paper's Economic weather map if only to see what appalling forecasts they have made. Look for example at the predictions they have made at various dates for the level of GDP growth in the UK in calendar year 2009.

Over the course of 15 months, they have managed to reduce their prediction by a full 6%. We must bear in mind that government spending has not dropped, but it represents approximately 50% of the spending in the country. That means the FT have effectively reduced their forecast for the other half of the economy, the private sector by, 12%.

Given that anybody can read the spending from the government's budget reports, these economic gurus only have any merits if they can judge the pulse of the private sector, which in this case the teenage scribblers have singularly failed to do.

So here are their forecasts for UK GDP growth in 2009 from April 2008 to July 2009.

April 2008:1.70%
July 2008:1.00%
October 2008:-0.20%
January 2009:-2.80%
April 2009:-3.80%
July 2009:-4.30%

Did you spot the trend? At that rate, a steady drop averaging 1.2% per quarter, can we expect a final value around -6% by the end of the year, or would that just be guesswork?

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