February 25, 2008
Prescient Economists

AP reporter David Ammons says that he knows some.  (In an article on Washington state's budget problems.)

Economists say the U.S. is in a mild recession, and the Senate budget panel says the state faces a deficit of $937 million in the upcoming two-year fiscal period.

Why do I say Ammons' unnamed economists must be prescient?  Because of the most common definition of a recession: two successive quarters with declines in the GDP.  Since there was growth in the 4th quarter of last year, what Ammons is saying is that there will be negative growth this quarter, which will end in March, and that there will be negative growth next quarter, which will end in June*.

Alas, Ammons does not identify these economists, which is unfortunate because prescient economists, economists who can see the future, would be extremely useful.  I would think that a reporter of his stature** would want to tell us who these economists are — and how they manage to do something no other economists, in any country, have been able to do before.  Or even any non-economists, for that matter.

(If you would like to see what named economists, none of them prescient, think will happen this year, there are many places to find that information, for example, here, here, and here.  Most seem to expect slow growth.)

Cross posted at Jim Miller on Politics.

(*There is one other possibility, that this quarter has a decline and that the numbers from last quarter are revised to show a decline, which could happen, but seems unlikely.

**According to David Postman of the Seattle Times, David Ammons is the "dean" of Washington state's press corps.)

Posted by Jim Miller at February 25, 2008 05:50 PM | Email This
Comments
1. Can you say M-I-C-H-I-G-A-N? Thanks to the "progressives" the light in the tunnel is an economic train bearing down on us.

Posted by: Doc-T on February 25, 2008 06:06 PM
2. Economic forecasting, Jim. It's kind of like those people on T.V. who predict what the weather will be like in the future. They aren't magicians, they just study what has happened in the past, figure out ways to explain it, and then try to apply it to the present and future. I also don't understand why you call the unnamed economists "prescient" but the named ones aren't - they are both making predictions about the future, just different predictions.

Posted by: Noble on February 25, 2008 07:05 PM
3. I seem to recall someone once observing that leading economists have successfully predicted six of the last three recessions...

Posted by: airfoil on February 25, 2008 07:09 PM
4. @2. You mean the one's that tell us we are all gonna die from global warming, but can't tell us what next Tuesday will be like?

Posted by: Jeff B. on February 25, 2008 07:52 PM
5. I keep waiting for the couch patato news networks to tell us the recession is over. When they can report .04% growth as recession, they must be dreaming Obama will win the election.

Nation wide we have a down size for sure, but people are still spending. At least looking at all the paper dealer plates on new vehicles and the number of cars on the road.

My problem is rising taxes and using up my food for fuel which is empting my wallet. Government can cut back the feel good stuff and the economy would be fine.

I had my fortune read once with my sister and the fortune teller said wedding bells were in my future. Sure eight years later! I'll believe in fortune teller/economist when pigs can fly.

Posted by: Ken Howard on February 25, 2008 08:29 PM
6. Get ten economists in a room, and you will find eleven opinions.

Posted by: Bruce Guthrie on February 25, 2008 08:31 PM
7. I gotta agree with Ken:

"Government can cut back the feel good stuff and the economy would be fine."

But there is no chance with Gregoire and her gang of thieves. They want all that you have!

Get a raise this year? They'll gobble it up!

Got a job? They will tax you to death!

Got a house? They'll tax it till you don't!

Got anything else? They'll take it!

The Democraps want it ALL!

Posted by: GS on February 25, 2008 08:43 PM
8. Here's another amateur economist's clarification:

This definition of a recession by Jim's economists is not necessarily true: "two successive quarters with declines in the GDP."

Many economists say it only has to be a decline in GDP growth. So if GDP grew at 4.5% one quarter and then grew at 4.4%, then the next quarter at 3.7% - that would technically constitute a recession. It doesn't have to be two successive quarters of negative GDP growth as their definition implies.

Posted by: Doug on February 25, 2008 09:03 PM
9. 1 Billion deficit.

And how much did that Light Rail cost us?

And how much is the completely unnecessary 520 replacement going to cost us (2B for starters)?

Posted by: John Bailo on February 25, 2008 10:32 PM
10. Not only is there a problem at the state level, but the King County investment pool will get whacked by the subprime crisis. There are some interesting times ahead.

Posted by: WVH on February 25, 2008 10:52 PM
11. Doug: that is basically correct. There's more than one definition of recession, and most economists do NOT go by the successive-quarters-of-negative-GDP definition.

However, as this IS the prevailing definition, the reporter is logically obligated to tell us if a different definition is being used.

Posted by: pudge on February 25, 2008 11:14 PM
12. How much did the decision to cover 12000 illegals with medical care cost us?

Is the Price tag in for that boondoggle yet?

Ding Ding Ding Ding

Posted by: GS on February 26, 2008 04:55 AM
13. WVH, as usual you have hit the big question this election. Will the unions (and their stock market related retirement funds) and municipal governments (read retirement funds again) realize the folly of their spending ways and realize their actions will hurt the stock market and their retirement funds.

Will they then turn from their Democratic electeds and vote Republican?

I know many retirees on the State retirement system are worried their well-earned bennies they were promised are in danger.

But, like Jim says, are we really in a recession? It is hard to say that with the success of Boeing and our reliance on international trade. I know the other big employer in this State is the building industry and they are worried because house prices may temporarily drop 10-25%.

But, like Jim says, how can economists predict the housing market when they made those assumptions when interest rates were high and we entered winter- the slow real estate season? Let's wait till March and April before we write off that industry.

Posted by: swatter on February 26, 2008 07:24 AM
14. I do not want to hear any more crybaby stuff from the people in Olympia about not having enough money. We just got our 2008 property tax bill and yikes! Our evaluation increased 18% (in this market that makes it hard to sell) and the tax bill itself increased almost 12%. In about 2 years, our taxes will equal our mortgage payment and we are NOT in that bracket where people are pitied. We are middle class. Hubby just retired so not also fixed income. This year's tax bill equals over 10% of his take home retirement pay. Now factor in the huge gas tax, the sales tax and we might soon have to join those taxed right out of their homes (and we'll be praying someone will want to and be able to purchase our house on 5 acres.)

Posted by: Rae on February 26, 2008 08:32 AM
15. Must I remind y’all once again that Gregoire has played a “shell-game” with the State Finances. There is no “Rainy Day Fund” when the State Retirement Fund is underfunded by $5 BILLION per the 6/30/07 Annual Report AND with nearly $37 BILLION invested in Equities and markets down approx 10%, that is another $3.7 BILLION underfunded.
Don't ignore the shell-game dudes.
If you borrowed another $200,000 on your home equity and put the proceeds in the bank, would that mean you have a Rainy Day Fund?? Yeah and another $200,000 in debt that someone must pay off.
Rossi has plenty of campaign fodder.
I know of no one who voted for Rossi last time and is now a Gregoire fan.
Isn’t is amazing that a State with so many anti-Military KLOWNS fail to connect the dots that Boeing, Microsoft & others have been the proud beneficiaries of War dollars.
Also, the anti-builder KLOWNS fail to see how important the Construction Industry has been to State & Local Governments.
Local Governments rely heavily on Sales Tax & Permits.
Things are slowing down.
Wait until the next State Economist Budget Forecast Revisions.
The phoney-baloney Rainy Day Fund could evaporate overnight and we are still stuck with the $5 BILLION+ Underfunded State Retirement Fund…and all those new State Employees.

Posted by: Mr. Cynical on February 26, 2008 11:22 AM
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