How to Be An Economist

Guess what? After a month or so of better-than-expected US economic data, economists are feeling better about the economy.

Nine months ago, of course, economists were feeling great about the economy. In fact, they were in almost complete agreement that the future looked terrific. Then the economy began to crater, so economists began to feel worse about it. Two months ago, after seven godawful months, economists felt downright lousy about the economy and agreed that the future looked horrible. Now, after two surprisingly-not-terrible months, economists are feeling better about the economy and are not sure the future is so bleak.

So here's your crash course in how to be an economist:

*Analyze what has happened.
*Conclude that the future might be different...or it might be the same.
*Pick one!

(You think I'm kidding...)

See Also: Economists Agree: Outlook Uncertain
George Soros: This Is The Worst Economic Crisis in 50 Years, And You're About To Get a Lot Poorer

Follow Henry Blodget on Twitter: www.twitter.com/hblodget

Comments

[dadw5boys]

Being an Ecomonist is no harder than being a stock brokers you have a 50 -50 chance of being right. But if your worng throw out words like Maro Effect to discribe so national economic change or Micro Effect to explain away small changes in a companys economic problems.

By the time they figure out you have no idea what is going on you will have retired with good benifits!

[Herrington]

Whoopee! The bailout of Wall Street has propped up the appearance of prosperity, the GDP, for yet another quarter. Yet speculative trading accounts for an increasing proportion of the GDP because a stock or commodity transaction is treated as if it were a solem recognition of value. So the whole picture is skewed.

Inflation and unemployment are actively discounted while speculation is treated as if it were a legitimate economic engine. Speculation, driven by accumulated wealth chasing more wealth, should not even be a factor in the GDP. Transactions in long term investments perhaps, but not day trading.

Economists are whores, at least the Milton Friedman and Greenspan variety. And the pity is that lying does not serve even the liars in the long run.

[freshnotbitter]

The Republican's big government spending program handouts to Wall Street bankers is working pretty well, I must say.

Gee, how about a big government boondoggle spending program that creates wasteful companies that very inefficiently finds a solution to the energy problem - like a car that consumes less oil, solar energy, super conductivity.

Oh, no, we can't give those 4 eyes sesame crunching egg heads any money. That would be a big government, big spending government boondoggle and, besides, Detroit would get really, really, angry.

[joebaggadonuts]

I am glad you stated the obvious, Henry. Thanks. And every one of the commenters here seem to be right too.

What I want to point out is that the R's seem to like economists, and don't think they are part of the elite which those who would pander the the working class American sensibilities disdains. Nevertheless they have smeared historians with the elitist and left wing-nut monikers. Yet both "sciences" are academic pursuits at their base. Clearly, anyone who agrees with the Administration is to be respected for their opinions and those who don't should not receive such respect. It will take many observations like the ones here about economists to disempower such foolishness as to believe or ignore the message simply because of its source. Clearly people need a framework to make up their own minds and that requires active learning, not listening to instructors on right wing radio or even to simply reading Huffpo. Active learning requires investigation and personal familiarity with hard facts. There's no short cuts through expert opinions.

[WIpatriot]

Soon, joe, people are going to get some "personal familiarity with hard facts" and maybe
THEN they will wake up.

[Herrington]

Hey Joe, spoken like a true authentic thinker. When you live and learn long enough, it is an inescapable conclusion and you allude to it here, authority is no substitute for proof, reasoning power, or conscience.

[DatelessNerd]

Economists are hacks, because they fail to grasp the social implications of shifts in the distribution of wealth.

A perfect example is today's "inflation report," that's being misinterpreted as saying that the economy is in better shape than expected. Food prices rose at the fastest rate in 18 years, and energy prices remain astronomically high.

As a result, working-class people aren't making other purchases, such as furniture and vacations. Demand for non-essentials has dropped dramatically, keeping those prices down.

When economists combine the prices of essentials (food & energy) and non-essentials, inflation appears to be moderate. But it's a meaningless number, because the prices for the things people must buy have gone through the roof.

Now you're beginning to see the anger of working-class Americans reflected at the polls in places like Mississippi. It's going to threaten the social fabric of this country in ways unseen since the Great Depression. And when it does, economists are going to wonder why their formulas didn't see it coming.

[GreedyOldPsychopaths]

Good post DN! I would only comment that the Great Depression pales in comparison to the economic disparity borne during the Gilded Age that led to societal unrest and upheaval.

[WIpatriot]

You nailed it, Henry.

Great job if you're a data monkey, though.

[GreedyOldPsychopaths]

Most economists are run-of-the-mill types, incapable of deriving or utilizing complex mathematical modeling. And academia modeling economists, like Dr. Otto Eckstein (may he rest in peace), that emphasize excrucitating detail and accuracy are something of a rarity.

Data reactionists that do not fully comprehend their subject or paid shills for money interests. Further evidence that Veblen and Galbraith may have had it right all along.

[bgregs]

And it's even easier to be a REPUBLICAN economist!

1) Find out which party is in the WH.
2) Find out which party is in control of the Congress.
3) If the republican policies are being followed, everything is peachy keen! If the democratic policies are being followed, the economy is being driven into the ground!

[ADMarshall]

Pundits' and J. Q. Public's problems with economists' forecasts usually stem from not paying attention to or considering what the economists include in their qualifications of "ceteris paribus" (other things held constant for forecasting purposes). Even a micro-economy is a system of almost infinite influences. If some are not assumed to stay relatively constant over the forecast period, estimating future changes is almost impossible. If those receiving economic forecasts can't wrap their heads around that much, they're left at the mercy of pundits who either will or will not understand the relative value and limitations of the forecasts reported upon. I'd bet that, on average, the media's reporting on economists' forecasts is vastly more inconsistent than the forecasts themselves.

[HeevenSteven]

I know you're not kidding. They always have some convenient post-hoc explanation for why their predictions didn't pan out.

[saibotchilizm]

The more I read about "mainstream economists", especially the free-trade borderline libertarian bent of the Milton Friedman branch, the more disdain I have for the entire field. They claim that Economics is as rigorous and hard a science as physics or chemistry, build computer models and use their economist "logic" to decide how people should live their lives, and talk until they are red in the face.

Then when their models and "logic" are proven wrong every step of the way, they insist they were in fact right, and that especially this time, we should listen to them. Because if we don't, all hell will break loose. And then when they're wrong again, the MSM gives them more time to talk about how they were in fact right, and this time, we should REALLY listen to them, because if we don't....

[Henry]

Economists are like weathermen. Explaining what has happened, like pro sports announcers, in hindsight with the economics lingo makes them a breed. Take Alan Greenspan, please!

[peterg76]

But to be a successful economist, you can't just guess - you have to "predict" what the wealthy want to hear. Not counting the vanishingly small number of economists that study real-world economies instead of theoretical ones.

[Rockyman]

Well, I'm no educated economist yet it appears to my untrained eyes that what has fueled our economy was SUPPOSED home values that have made us feel confident we could borrow and SPEND SPEND SPEND! Most peoples salaries certainly couldn't support our consumption. Now home values are decreasing and lenders are tightening lending-standards. This will all lead to a roller coaster ride trending downward despite an occassional anomolous look "upward".

[americaforme]

Gosh I just opened my wallet, oh my, it's empty. I'll have to get to the nearest Blogg to figure it out, I seem to have misplaced cash, and credit cards. Our family forgot to pick out a destination for an exciting vac...Oh my! I like wearing my last years sandels, they were so comfortable..Shoot, I really haven't lost weight since I gave up eating out. CDs are just as good as concerts, you cant see the people anyway. I'm such a good girl I can pass up the wonderful oders of my favorite Bakery. This frugal life is so great....