Tyler Durden: A year and a half ago, in May of 2014, when Bank of America’s chief economist Ethan Harris decided to try his hand at long term (really long-term) forecasts, he made several predictions: that 2015 GDP would be 3.3%, that the long-term potential growth rate of the economy is 2.2%, and that the long-term unemployment rate is 6%.
One year later, we yet again see just why economists tend to be a source of amusement everywhere they go, because moments ago the same Mr. Harris just admitted that 2015 GDP would actually be 2.5% (at best, and realistically 2.1% if Q4 GDP ends up being 1.8% as the Atlanta Fed forecasts), that the long-term growth rate is now lower at 2.0%, even as the long-term unemployment rate has mysteriously declined to 5%, or in other words, a lower potential growth rate results in lower unemployment.
Here is what Harris predicted for the “long-term” in early 2014:
And here is his same forecast as released earlier today:
We leave it up to readers to spot the amusing, if startling, differences.
And yet one thing that hasn’t changed in the past 18 months is that like then, so now, Bank of America refuses to forecast a recession any time in the next 12 years! To wit:
Obviously, there is considerable uncertainty in forecasting many years out, so these should be viewed as rough baseline numbers. For example, if history is our guide, at some point in the next decade the US will experience a recession, but predicting a recession far in advance is almost impossible.
So predicting a recession at some point in the next 12 years impossible, but predicting next year’s GDP is “possible”… assuming one has a 25% error rate tolerance.