This was a very bad forecast: GDP actually shrank by 3.3 percent once the financial crisis hit. What may be worse is that the economists were extremely confident in their bad prediction. They assigned only a 3 percent chance to the economy’s shrinking by any margin over the whole of 2008.15 And they gave it only about a 1-in-500 chance of shrinking by at least 2 percent, as it did.16 Indeed, economists have for a long time been much too confident in their ability to predict the direction of the economy. In figure 6-4, I’ve plotted the forecasts of GDP growth from the Survey of Professional
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