THE TEACHING ECONOMIST - William A. McEachern                 

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Issue 24, Spring 2003

William A. McEachern, Editor

Economic Forecasters

On the same day in early January when thousands of economists converged on Washington, D. C., for the Allied Social Science Associations' conference, The Wall Street Journal published its economic forecast for 2003. The forecast is based on a semi-annual survey of 64 economists from banks, corporations, consulting firms, and academia. Often quoted in the media, this group puts a public face on the profession. In a sense, they teach the public about the economy.

Among the more than two thousand presentations at the ASSA meetings were scores of papers that would appear to be of particular interest to economic forecasters. For example, the American Economic Association sponsored 140 sessions, including titles such as "The National Academy of Science's Panel Report on the CPI" and "The Conduct of Monetary Policy." The Econometric Society, publishers of Econometrica, sponsored 56 sessions, including "Forecasting and Forecast Evaluation" and "Real Time Forecasting." Other relevant ASSA groups included the National Association of Business Economists, the American Finance Association, and the International Society for Inventory Research. Given this meaty menu, I wondered how many of those economists surveyed by The Wall Street Journal would be in attendance. Were these sessions considered relevant enough to attract the nation's most visible economic forecasters?

Apparently not. Only one of the 64 economists in the WSJ survey was listed in the ASSA program as a formal participant—that is, as a presenter, discussant, or session chairperson (Allen Sinai of Decision Economics, Inc. was a discussant on a national policy panel). Perhaps formal participation is too restrictive a standard. After all, some WSJ forecasters may have come simply to attend sessions or to recruit new economists. Conference organizers published a directory listing about 6,500 meeting registrants who were staying at one of the eleven ASSA hotels. A search of that directory did not uncover any additional WSJ survey economists.

I cannot say whether other WSJ survey economists attended the meetings, but I can say that no one else was listed in the program or was preregistered and staying at one of ASSA hotels. All seven academic economists in the WSJ survey were among the missing. The bottom line is that nearly all the economists in the WSJ survey apparently found the flagship economic conference not worth their time.

Maybe these forecasters travel in different circles, breath different air, and were therefore largely oblivious that the ASSA meetings were even being held. As a reference point, I wondered how many of them belong to the American Economic Association, the lead sponsor of the ASSA meetings. A January search of the AEA's online directory (AEA members can go to http://www.vanderbilt.edu/AEA/ and click on the directory) found that 22 of the 64 WSJ forecasters are AEA members, including Dr. Sinai and five of the seven academics.

So among the 22 AEA members, only one attended the profession's annual exchange of ideas. How representative is this attendance rate among AEA members? There are about 18,600 AEA members, and about 2,400 of the ASSA registrants were also AEA members. This implies that about one in eight AEA members attended the meetings. So among the 22 AEA members from the WSJ forecaster group, about three would be expected to attend on average. Again, only one actually attended. On the other hand, about 4,100 people listed in the hotel directory were not AEA members but attended the meetings. Among the 42 WSJ forecasters who were not AEA members, none apparently attended the meetings. However you slice it, the WSJ forecasters were underrepresented at the meetings.

By the way, based on the WSJ survey, the average annualized forecast of quarterly real GDP growth in 2003 was 2.7%, 3.2%, 3.7%, and 3.7% for each quarter, respectively. The CPI was projected to rise 2.2%, and the unemployment rate was projected at 6.0% in May and 5.7% in November. Questions: Does knowing that so few surveyed economists attended the profession's meetings make you more confident or less confident in their forecasts, or do you think their attendance is irrelevant? What does your answer say about your view of the WSJ forecasters, your view of macro forecasting in general, and your view of the ASSA meetings?

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