Learning

It’s like the Wall Street Journal isn’t heeding the lessons of the past. Though, they’re not the same as the administration or elected officials making promises, but bad idea guys.

From this article, I see this:

I see this, and think a few thoughts.

  • Didn’t people learn anything from the implications of rosy predictions in the wake of the now-infamous Romer/Bernstein graph?
  • You’re comparing forecasts to forecasts. Apples to Oranges. You make the GDP growth in ’10 look accelerated because the red forecast is below that of ’11’s current policy forecast. The red policy appears only marginally better than the light blue one when we know nothing of the basis behind either forecast. I realize it’s Moody’s but no links are provided as a basis of comparison.
  • At least the unemployment predictions aren’t as rosy as Romer/Bernstein. If you believed them, unemployment would be at 7.0% percent right now in 2010Q4. They predicted it would be at 8.8% without the American Recovery and Reinvestment Act (AKA Stimulus). What is the actual unemployment rate? 9.8%. Whoops.
  • The deficit pictures seem like they won’t be inaccurate, but deficits occur when you spend more than you bring in. If we hold the elevated levels of spending constant, this isn’t far-fetched. Hopefully, spending will be meaningfully cut.

Romer/Bernstein had this infamous graph on page on page 4 of their analysis justifying the stimulus.

You can see what people have done to it since below:

So, yeah. Color me as skeptical that making these predictions is a wise idea.

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