From Forbes on April 7, 2016:
Ever since the great recession of 2008, which seemed to surprise most economic prognosticators, it appears that there has been an increased interest in predictive analytics. Unfortunately, even with this new interest about the future, most predictions are wrong. Few, if any, seem to know where the economy is headed.
Several instances since the 2008 meltdown point out this dilemma. In a 2010 interview with CNBC, Alan Greenspan, former chairman of the Federal Reserve made several statements that underscored this difficulty of economic forecasting:
- “… the IMF , which has got the best group of economists I know, in the spring of 2007, wrote that risk is declining over the previous six months and that the American economy is improving … They are as good as they get and it is just not feasible to forecast a financial crisis…”
- “There’s been very little advancement in the success of economic forecasting since the 20’s [1920’s].”
- “There is some-there are very few people in the Street who actually do forecast consistently. I think I know them all.”
Predictive Model Conundrum: If No One Knows Where We Are Headed, How Will We Know When We Get There?