More than 35 years ago, I learned I had no future in modeling.
No, not the kind that involves baring leg for the camera. (To anyone who knows me, I hope I haven't put you off finishing today's breakfast.) The modeling I mean was on a mainframe computer at Princeton University, where I was impersonating a grad student, one of many being initiated into the dark art of economic forecasting.
In the age before PCs, econ students were given the daunting task of running a program called "Econo-World." The purpose of the exercise was to prepare a simulation, to show how our policy decisions — setting government spending levels, money supply and interest rates, for instance — would play out in the real world.
More often than not, the computer spit out my thick batch of IBM punch cards with a wry message: "To continue could be misleading." That bit of Ivy League drollery was the techie's way of saying, "Garbage in, garbage out." In other words, the time had come to start over again.
Frustrated as I was to read that message, it's a lesson too few economic seers heed trying to forecast growth, employment, inflation and interest rates in the months and years ahead.
"To continue could be misleading" should be tattooed on their foreheads.
The last six years, since the start of the Great Recession, have left a trail of sorrow for economic sages. Most didn't detect the economic downturn until the nation was six months — or more — on the skids. And many, whether they peered into the mists ahead for the Federal Reserve, the Congressional Budget Office (CBO), financial institutions or consulting firms, remained optimistic of a happy change in fortunes for far too long.
These bent bellwethers would be the stuff of farce had not so many decisions — past and present — been guided by misdirection.