Saturday, July 7, 2007

On tautologies

John Kenneth Galbraith once said, "The only function of economic forecasting is to make astrology look respectable."

With that generous assessment in mind, let's turn to a paragraph from a NYTimes article on last month's job figures, reprinted on the front page above the fold of the business section in this morning's Oregonian):
If the June report is any indication, economists say, the labor market should continue on a similar path for the rest of the year.

It's difficult to simplify an observation like that one much further, but if one were to try, it would probably come out like this: If future months are like June, then future months will be like June.

I used to think that, when I finally became to old and ill and sick and stupid to hold a regular job, being a weather forecaster would be a nice featherbed arrangement: They get to wear those sharp blazers, and by the time we figure out they were wrong about today they're already on to make forecasts about tomorrow.

Now I'm starting to think that economic forecasting might be an even cushier arrangement: The hours are better, the suits are a little more expensive, and while even weather forecasters still have to say sentences that pretend to refer to the physical reality around us this is a constraint nowhere found in the profession of economic forecasting, it appears.

After all, if a weather forecaster wants to claim, on very little basis, that the weather we had last month will be the weather we'll have for the rest of the year, at least they'll pantomime for us in front of real-time satellite imagery, with giant blue-screened maps full of swooping arrows and jagged front lines. They'll pay us the courtesy of putting on a show, in other words.

An economic forecaster, who wants to make a similar seat-of-the-pants claim usually has nothing more than a mechanical pencil and a cocktail napkin (with several sweaty glass marks on it).

And all this to whoop up a forecast that the job market is "still moderate" and "subdued but strong enough," whatever that means. (One thing it means, of course, is that the economists who wrote the report are clearly not experiencing the job market themselves.)

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