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Monday, October 31, 2011

Fatuous Forecasting

Look, economic forecasting is necessary. People need to act now in situations where the best decision depends largely or entirely on future conditions. So, go ahead, make a guess! Publish it if you want, and even ask others to pay for it if they will. But let's not pretend to accuracy we can't possibly achieve:

"Some cities will continue to fade, however. Fort Lauderdale, Fla.'s forecast is for a 9.2% drop through next June and another 6.7% the 12 months after that."

Don't you love that ".7" on the forecast for two years from now? If these folks can get within two or three percent for a two-year-out forecast, they are doing a fantastic job.

1 comment:

  1. I would like to see forecasts with confidence intervals which would invariably expand the further the forecasts were made. The CBO's 2000 projections of surpluses in the trillions by 2011 was decidedly unreliable.

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