Why are economists so constantly surprised? It’s becoming the tag line for just about every economic story lately: “… than economists expected.” As in — mostly — “worse than economists expected.” They’re supposed to be the smartest people in the room.
Today’s invocation, as cited by the Associated Press:
The number of laid-off workers receiving unemployment benefits has jumped to an all-time high near 5 million while new jobless claims remain well above 600,000. Both figures were worse than expected and new projections from the Federal Reserve show unemployment rising for the rest of this year.
Three days ago the government released the monthly report on consumer spending. Economists got it wrong… again:
The Commerce Department says consumer spending rose 0.6 percent in January, even better than the 0.4 percent gain that economists expected.
This comes on top of last week’s bombshell that the economy shrank at the end of 2008 more than…well, you know…
The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.
“Analysts” (economists who drive nicer cars, basically) don’t get off the hook, either. Take today’s earnings report from Target:
Discount retailer Target Corp. says its same-stores sales fell 4.1 percent in February. That was better than analysts had expected.
Wall Street, which hates to be surprised, is reacting to today’s surprise in the way to which we’ve yet to become accustomed. Perhaps the solution is for economists to predict that things will be worse than they expect, then take the bounce when Wall Street is pleasantly surprised.
Granted it’s not sound economic theory, but since when has that been a problem?