Tag Archives: economic forecasting

Jan Hatzius made some macro projections about wages, unemployment, and inflation: Goldman’s Jan Hatzius wrote Sunday that unemployment should continue to decline to 3% by early 2020, noting the labor market also has room to accommodate more wage growth. Hatzius predicted that average hourly earnings would likely grow in the 3.25% to 3.50% range over the next year. ... For now, Goldman has a baseline forecast of 2.3% for core PCE ... Well, these are all roughly consistent with Dynamic...

Although it might be possible to find dissenters, the apparent consensus among financial market practitioners is that mathematical economic models provide terrible forecasts. One response is to keep searching through the set of all possible models, hoping to find something that works. The author's suggested response is to accept that forecasting is an inherently impossible task. However, in order to advance beyond nihilism, we need to quantify why mathematical models are terrible. My...