Is Economic Forecasting Completely Useless?

The Wall Street Journal’s survey of Einstein economists found pessimism growing, and hopes of a second-half recovery fading. Here’s how recently they changed their tune:

As recently as September, economists on average thought the U.S. would see annualized GDP growth of 1.2% in the first three months of this year; now, they see a 4.6% decline.

So we wonder, is there any value in forecasting at all, and, is there any reason to put any stock in what they see for the latter half of 2009 (they still see a slight return to growth by the end of the year)?

Menzie Chinn at Econbrowser put together the following chart, which indicates how much more negative they economists have gotten in just the last month.


The dark green line represents how far their views have dipped since what they saw coming only a month ago.

Is it any wonder that America has, what Camille Paglia recently called, “Economist fatigue”. Nobody agrees on anything, and they can’t really tell us what’s going to happen in the future.

And yet, and yet… there’s no shortage of demand for them on TV, or in the papers for surveys such as these.