The Positive Side
- Dec 26, 2014
It amuses me that ever since books came out about unknown events, possible scenarios and lots of unintended relationships between your birth date and how good a hockey player you could be, more and more forecasts are being distributed by lesser known specialists in their fields. The fact is, forecasting is an art.
Nowhere is this more obvious than when dozens of very well-respected economists and social scientists issue their 2015 forecasts for GDP. This is perhaps the most under-appreciated and least understood economic metric, because it represents both the sum of all fears and the least likely of many events. Evaluation of the U.S. economy is based on a system of income and product accounts and other measures of import, export and minor activities that together constitute a change expressed as a percentage that represents growth over the quarter.
Taken together, it’s a pretty good way to see whether the economy is dipping up or down, but looking at it in a vacuum presents the same issue as measuring the Consumer Price Index accurately. With more than 2,000 data points making up the latest version of the gross domestic product and some part of the measure coming from our foreign partners (imports mostly), GDP is kind of like a weathervane, swinging at the whim of commerce, floating sometimes on a shifting wind, but otherwise subject to lots of things that cannot be controlled by Congress or the seasons.