I wrote this in late December of 2007:
The Wall Street Journal has a story on surveying economists and their guesses that there will be no recession.
One of the biggest questions hanging over the economy remains: How far is the housing market from its bottom? Though many major markets are experiencing steep price declines, much of the country is OK. The S&P/Case-Shiller index, a popular measure of home prices that has shown steep price declines, has limited geographic coverage — perhaps overstating the extent to which the housing sector’s declines will weigh on consumers.
“The states that are having a hard time are where there’s been a lot of speculation,” says Mark Nielson, chief economist at MacroEcon Global Advisors, which sees economic growth at more than 3% through next year. “Their economies probably will not do as well as the rest of the country.”
The article also talks about the weakening dollar helping the economy which seems counterintuitive to most. In the end, our economy and the world economy is a large system that, much like the body, is very difficult to predict how change in one area affects another. The market is it’s own beast and will do what it wants to do. Just like real estate, economists have an easier time explaining the past than predicting the future.
This is an article from November 13, 2001 on the economy. David Brancaccio is the senior editor and host of “MarketPlace,” a financial news radio program produced by Minnesota Public Radio.
On Housing,
BRANCACCIO: I own a house and I have access to extraordinary amounts of market and economic data here in the newsroom. Yet, I personally am never quite sure where the housing market is going on my street. What that means is we should try not to make bets about where the housing market is going and instead do a careful assessment of our own financial profile and our own housing needs. Interest rates are really cheap right now, remarkably cheap. Does that mean that people can afford a house? It means more people can afford to buy a house, but of those that can afford to buy a house only a subset of them need to own right now because of their life situation. So the question should be “Can I afford it?” and “Is owning right for me right now?”
On the 2001 economy recovering,
BRANCACCIO: No one knows the answer to that. If someone says they knew the answer, they would be guessing. The game is to make rash predictions and if you make enough of them, eventually someone will be right and they will be praised as clairvoyant.
That last paragraph is what you will see me write repeatedly. We can guess on factors but in the end no one is 100% sure.
For your entertainment, 87 predictions that didn’t work out.
