Economic Projections

Greg Mankiw, who is a young Harvard economist posted something today that should give all economists pause. The chart above explains why the US budget shifted from "surplus" (In the way that the government accounts for its dough it does not have to follow the rules on unfunded liabilities that other economic entities do) to deficit.

The largest factor in making the change is changes in assumptions and technical adjustments by the economists. That amounts to almost half of the originally projected surplus. Mankiw has some interesting stuff on his blog in case you want to check it out.