Assuming something called objective reality exists, seems like economists on Wall Street are not a great resource for getting to the truth.
Last week, Credit Suisse (NYSE: CS) issued a report stating their model points to a 0% chance of a double dip recession.
This week, David Rosenberg is out with a note saying his model calls for a 48% chance of a double dip recession.
“But,” you say, “which model has the higher level of efficacy?” According to the modelers, both models have only had one incorrect prediction over the same span of recessions. Credit Suisse offers their accuracy:
Rosenberg offers his, “the ECRI smoothed index (the growth rate) has only sent off one head-fake historically, back in 1987.”
So, we are forced to conclude economists are near worthless prognosticators (not earth-shattering news). Worse, with models and data which reach insanely opposing conclusions, it’s no wonder our policy makers are more reactive than proactive. Which models should we trust? (See “Professor David Colander Tells Congress Econ Models are Flawed“)
With a 50% spread between the two models, we invite our readers to offer their best guess as to the probability of a double dip recession. You have a 50% chance of either besting Credit Suisse or David Rosenberg! (seriously, let us know in the comments below).
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