This happens all the time, and it sometimes costs my university money.  I’m pretty sure I won’t be talking to that real estate company or that bank again, even though subsequent events have confirmed my forecast.  I’m also regularly criticized by economic development people, city managers, tourism professionals, and real estate sales people, for either not being optimistic enough or for pointing out issues such as high marginal tax rates.

This confuses me.

It seems to me that when you ask an economist to speak, you would want the truth as they see it.  You are presumably looking for information to help make better decisions, and I don’t see how sugar coating things helps decision making at all.  I’m guessing that many people who made decisions last summer based on talk of green shoots and claims that a real estate recovery was imminent have a few regrets today, and a smaller net worth.  Optimism didn’t help these people.

That’s not to say I’m always right.  I’ve been wrong, and I’ll be wrong again.  That’s the nature of forecasting.  That’s the reason I always recommend that people listen to many economists, and then make their own decisions.  When doing that, it makes a lot of sense to pay particular attention to those who’s opinions might conflict with your interests or priors.

So, I have a few suggestions:  If you want a motivational speaker, get somebody with an inspiring life story.  If you want a sales person, get a sales person.  If you want to try and understand economic activity, get an economist.

There you go. This is a bump in the road in a widening recovery, the existence e of which is generally accepted, with only some lingering doubts.

Even if you don’t buy our analysis, which is pessimistic, the quotes reflect a remarkable confidence. Given the massive weaknesses in our economy—over-leveraged businesses, banks, and consumers; continuing defaults on loans of all type, the worst job market in decades, and the ineffectiveness of both monetary and fiscal policy are just a few that come to mind—I can’t see how anyone could be so sanguine. Seems to me that analysts that have only “lingering doubts” are the letting their hearts lead their analysis.

We all hope for a recovery. The recession is ruining families and lives, but I don’t think analysts do a service when they let their analysis or forecasts reflect their hearts. The public is best served by our best detached analysis.