Macro forecasting is an area where it is easy to be as right as the consensus, but very hard to be more right. This highlights that consensus macro forecasts provide no value—it doesn’t tell you anything everybody else doesn’t know so there is no information advantage.
- Nobody grades an economist and they lack a published track record of their predictions to be believed.
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Having to think about everything all the time would be impractical so people rely on other people to think certain thoughts for them. This happens all the time without us noticing or caring most of the time. For example, reading what an expert has to say about something is more efficient than deriving your own opinion from source materials.
A Wall Street Journal poll of economists found that the probability of a recession in the next 12 months is 61%, down slightly from 63% from October 2022 and significantly higher than the 2022 Q3 roundup.
One question I find myself coming back to is whether or not macroeconomics is a useful source of explanations.
Private investment firms like venture capital and private equity are in the business of avoiding visible volatility of public markets. Because private assets don’t trade and investment managers go to great lengths to keep them from going down, assets appear to mostly appreciate (there are down rounds and losses, sometimes the chicken comes home to roost, but for the most part this is true) even when public markets are tanking.