Bartlett: No One Knows When The Next Recession Will Come (SUMMARY)
July 15, 1998
Federal Reserve Board Chairman Alan Greenspan is upbeat on the economy, but even Greenspan's forecasts have not always been on the mark, and many other economists have made equally bad forecasts.
- In January 1973, Greenspan said, "It's very rare that you can be as unqualifiedly bullish as you can now." Of course, we now know that at that very moment , the economy was on the brink of collapse.
- Greenspan's record did not improve after joining the Federal Reserve. On October 2, 1990, he told his fellow members, "The economy has not yet slipped into a recession." In fact, the nation had been in a recession since July, according to the National Bureau of Economic Research.
- In December 1969, economist Pierre Rinfret said, "There ain't going to be no recession. I guarantee it." A recession began that very month.
- In July 1990, a survey of 40 economists in the Wall Street Journal found only one, A. Gary Shilling, predicting a recession, even though we now know that one was already under way. The Journal reporter who wrote the article even ridiculed Mr. Shilling's forecast, saying he "now has predicted four of the past zero recessions."
The point is that all economic forecasts need to be treated with a great deal of skepticism. No one knows when the next recession will occur. Economist Ed Yardeni believes the so-called year 2000 problem with computers will trigger a recession next year. Maybe he will be right, maybe he won't. Time will tell.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, July 15, 1998.
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