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Economists have predicted 20 of the last 5 recessions…
Economics is great at explaining why something happened or what may happen in the future but complete shit at predicting when something will happen.
For a decade in the run up to the 2008 housing crash everyone was saying it was just around the corner but they were wrong for 9 of the 10 years.
If every year you predict the world will end or the market will crash, eventually you will be correct…
Right, but if you’re watching someone blow up a balloon, you know eventually it will pop even if you don’t know exactly when. That doesn’t mean you’re wrong to suggest we should stop inflating the balloon to avoid the pop.
If you just say the market will crash, maybe it will or maybe it won’t. If you say that the conditions exist for a crash, and describe them accurately, you’re right whether there is a crash or not.
And if you say there’s 100% chance, not only are you likely to be wrong, you’re also a useless moron deserving of ridicule.
if you’re watching someone blow up a balloon, you know eventually it will pop even if you don’t know exactly when.
There are two problems with this.
1: When a lot of people are making money by inflating the balloon, telling them to stop is not going to work well.
2: If the ballon ends up taking 20 breaths to pop and you are telling them to stop every time they blow in the ballon and it doesn’t for the first 19 times, they tend to think you are the boy who cried wolf and just keep on ignoring you.
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You’re right, that’s why you need legislation and regulation to prevent them from blowing up the balloon. The people pointing out the causal relationship aren’t necessarily in a position to do that themselves, they need to raise awareness so that there is sufficient concern to do something about it. That ain’t happening as long as bribery is legal, but that’s not the economist’s fault.
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That’s also not the economist’s fault. Raising the alarm and accurately predicting the causes of a crash are the things the economist are supposed to do. The boy who cried wolf was pretending when he raised the alarm. The economist is accurately describing the state of affairs, and the potential ramifications. Whether it takes 20 breaths or 100, the balloon will pop unless we take action and that remains true. If the boy who cried wolf saw wolves, and the wolves didn’t attack the sheep the first night, the boy is still doing his job to warn people. To torture this analogy a bit more, it’s like everyone can see the approaching wolves, and it is the townspeople who are the idiots for not believing the boy.
Economics is great at coming up with plausible sounding stories about why things happened, but that doesn’t mean those explanations are correct. The fact that the same theories lead to incorrect predictions is a strong indicator that the explanations are wrong, too.
Or to put it more bluntly, most of the field of economics looks a lot like a pseudoscience.
most of the field of economics looks a lot like a pseudoscience.
Well, when one of the founding assumptions is that humans make rational economic decisions, you are in for a bad time.
What if you assume they have infinite time horizons or instantaneous and free transaction costs over infinite distances?
I called this out when I was 19 and first took econ 101.
I was like, the foundational premise of this entire field is demonstrably wrong, wtf
Yes, but because it is broken, you never know when it is right. So even when it is correct it is still useless.
A slow running clock is still broken but technically right even less often. I use that metaphor at work to describe bad co-workers.
They couldn’t resist adding “in blow to Biden”
Stupid fucks.
Doesn’t economic situation affect presidential popularity in the US a lot?
Yes, which is why the Republicans use their time bomb strategy. While they’re in power, they pass something where critical parts of it expire in some number of years, which will line up with Democrats in power, then let it expire. The uninformed voters will fall for it every time.
Sort of. It may be more perception of the economy rather than the reality. There was a lot of “economically stressed” people who voted for Trump in 2016, even though all the data suggests they were not stressed, and the US economy overall was fine.
A year ago, there was data that suggested you could go either way. It was easy to come up with arguments for or against a looming recession, and you didn’t have to cherry pick that hard. People seemed to expect there was going to be a recession, but it kept not happening.
Most indicators now suggest the economy is mostly fine. Inflation still needs to come down. GDP is up. Unemployment is at historic lows. But people are still expecting things to be bad.
Unfortunately, yeah. While there are so many economic factors that are out of the president’s control, “the economy” as a whole is always, always used by republicans as a cudgel against any sitting Dem president if there’s any amount of decline (and when it’s growing, they look for any other issue to yell about). Uninformed or stupid voters invariably believe that the head of state is solely responsible for everything.
These fucks want a recession SO BADLY and it’s just NOT HAPPENING. I love it. Go get em, Powell.
Cause they get rich during a recession by buying things on the cheap because the over-leveraged middle class suddenly can’t afford things and have to discard them to remain solvent. They sell off the extra car or dump their shares for cash to make ends meet.
How do you induce a recession/downturn? By writing about an impending collapse. If enough people believe you, they’ll tighten their figurative belts, save more and spend less, causing the very recession you wrote about.
(Above is oversimplified by you can see the general logic)
Equally big factor: they get rich when there’s NOT a recession as long as interest rates are low. Low interest rates = high stock returns, more or less. So if they can bully the Fed into lowering interest rates to avert a recession, they still get rich.
Ever notice how the stock market tanks whenever there’s a good jobs report? It’s perverse, but wall street is rooting for main street to fail. (I mean, let’s be honest, they never really cared about main street, but now their fortunes are directly tied to our failure).
If I remember correctly, a recession did happen. It used to be defined as two quarters of negative GDP growth back to back, but yellen simply changed that definition.
You do remember correctly, but you (and most people) were always wrong. The two quarters thing was a rule of thumb, not an official designation. And Yellen didn’t change it, that’s just Republican/big business propaganda.
While gross domestic product (GDP) is the broadest measure of economic activity, the often-cited identification of a recession with two consecutive quarters of negative GDP growth is not an official designation. The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy. The NBER recession is a monthly concept that takes account of a number of monthly indicators—such as employment, personal income, and industrial production—as well as quarterly GDP growth. Therefore, while negative GDP growth and recessions closely track each other, the consideration by the NBER of the monthly indicators, especially employment, means that the identification of a recession with two consecutive quarters of negative GDP growth does not always hold.
https://www.bea.gov/help/glossary/recession
We got close, but there never was a recession.
Okay, then someone should update the Wikipedia article, because that still says that it’s two quarters with a 1,5% decline
Besides what others have mentioned, there was no drop in gdp.
It was never defined as that. That’s been a colloquial marker for one but never a real definition.
And Yellen doesn’t have anything to do with defining a recession either. The NBER (national bureau of economic research) is the authority that declares recessions, and they only ever do it retroactively
The Covid 19 recession was declared despite only lasting 2 months.
Shit like this is why we had the layoffs we say at the beginning of the year. It was all hysteria made up by a bunch of idiots who want a recession for…. Reasons.
The economy is strong, inflation is down overall (though still high), and unemployment has been below 4% for nearly 2 years, something we haven’t seen for more than 20 years.
The recession we’ve seen this year is fake.
Not so much fake, as manufactured.
The jobs market was doing well, unemployment was low. Many middle-class people had been working remotely for two years, and saved thousands in commuting costs. The housing market was leveling out, prices were reasonable, and interest rates were low.
People were finally starting to feel an inkling of security and independence. They could afford to buy a house, change jobs, sell the second car, and put some money away for a rainy day.
Which is a nightmare scenario for corporations that feed on a financially desperate populace.
So corporations jacked up prices, blaming supply-chain issues, forced workers back into the office, and laid off thousands despite record profits.
The Fed pitched in, hiking interest rates, and locking millions of Americans out of the housing market, and with it, their best path to financial independence, and vowed to keep those rates high until the unemployment rate was back at a level that the Corporate masters determined sufficiently punitive, and the working class had exhausted their savings.
When the workers are acceptably cowed, and the wealthy are satisfied that they will no longer resist subjugation, they will declare the economy ‘back to normal’
Just remember that low unemployment often means severe “underemployment” as people with degrees and other qualifications are forced to take jobs that pay significantly less.
lol that rag will take any chance to attack anyone left of center
Which is crazy to me. He’s a huge neolib. He may be more progressive than anticipated, but he certainly isn’t on the left.
Neoliberal doesn’t even have a definition anymore. People just say it to disparage anyone they want to.
Biden doesn’t fit many of any of the metrics of a neoliberal.
He’s not huge on privatization, he opposes austerity measures, he has been a proponent of much greater regulation, and he sure as shit isn’t a proponent on cutting government spending.
If only he weren’t quite right to he called left…
Edit: Sorry, Feel the need to elaborate.
In 1980s, he was not liberal. Held him back.
In 2020s, we was not liberal, he was progressive. Pushed him forward.
That shit got him locked in by all the clandestined powers that be.
According to the progressives: “at least it wasn’t Bernie.”
Two elections running…
