Crystal Balls

Megan McCardle summed the reliability of Paul Krugman on his economic projections. Krugman is one of my favorites because of his almost consistent absurdities. In the last couple of days he did a column on the wonders of the European economy. But his projections of the coming recession during this administration have been legendarily bad - almost as bad as Henry Kaufman's absurd projections on the stock market in the 1970s and 1980s.

McCardle list the following Krugmanisms -
"[R]ight now it looks as if the economy is stalling..." (September 2002)
"We have a sluggish economy, which is, for all practical purposes, in recession..." — (May 2003)
"An oil-driven recession does not look at all far-fetched." — ( May 2004)
"[A] mild form of stagflation - rising inflation in an economy still well short of full employment - has already arrived." —(April 2005)
"If housing prices actually started falling, we'd be looking at [an economy pushed] right back into recession. That's why it's so ominous to see signs that America's housing market ... is approaching the final, feverish stages of a speculative bubble." — (May 2005)
"In fact, a growing number of economists are using the "R" word [i.e., "recession"] for 2006." - (August 2005)
"But based on what we know now, there’s an economic slowdown coming." - (August 2006)
"this kind of confusion about what’s going on is what typically happens when the economy is at a turning point, when an economic expansion is about to turn into a recession" - ( December 2006)
"Right now, statistical models ... give roughly even odds that we’re about to experience a formal recession. ... [T]he odds are very good — maybe 2 to 1 — that 2007 will be a very tough year." - (December 2006)

The list is helpful for two reasons. First, it shows that with malice aforethought that some people can be pretty bad at predicting. Krugman has shown consistently how badly blinders can inhibit your powers of observation. But second, it seems to prove the old adage, namely "Economists have projected 11 of the last 3 recessions." (Only in Krugman's case the ratio on the left side is a lot higher.