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| Mon Aug 16 22:19:31 2010 Prediction Checkpoint 1 |
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| Mon Aug 16 22:19:31 2010 Prediction Checkpoint 1 How am I doing after over 2 years of predictions? |
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| I've been making a lot of predictions over the past two years! I thought I
would look back and see how I did. I force myself to make predictions because,
even if wrong, I'll usually figure out why I was wrong. In fact, the
predictions I got wrong are probably the most interesting.
There were a lot of predictions, so this is part 1. In The Great Stagflation of 2008 (March 2008), I predicted a few years of stagflation (weak or no economic growth even with low interest rates), and I was right. I was also right about gas prices: I made the bold prediction that we'd see gas for over $4.50 a gallon by 2010, when in fact we saw those prices later in 2008! However, then in Gas Prices (June 2008), I predicted gas prices of $6 per gallon in 2008 (!). Obviously I got that one wrong. Why did I get it wrong? Because the economic downturn started kicking in, and gas consumption dropped. And according to the supply and demand curve, when demand drops given constant supply, prices will drop. What did I learn from this wrong prediction? Spikes in gas prices will usually be followed by economic contraction, which in turn result in lower demand. Don't get me wrong, I still think gas prices will rise. But it will probably be a series of spikes and recessions, rather than an unbroken upward climb. In The S-Word (July 2008), I predicted that the Federal Reserve would flounder along with low interest rates rather than slowly raising rates to protect the dollar. This was a mixed result. I was right about the Federal Reserve: it has kept rates low. But I was wrong about the dollar: we haven't see huge inflation or a weakening of the dollar against other currencies. Why was I wrong about the dollar weakening? Lending has slowed so much that even with low interest rates, we haven't seen the extravagant spending that can cause inflation. And other countries are also having economic problems, so the dollar has remained stable (although see below for more predictions about the dollar vs. other currencies). In one of my worst predictions ever, I said that Congress wouldn't support a big bailout of investment banks ( Just say No). But that was just the first vote. On the next day, Congress approved TARP. Ooops. And I also said: the FDIC will continue to take possession of troubled banks (right), the Federal Reserve will keep open its line of cheap credit for financial institutions (right), a few more financial institutions will collapse (right), and the economy would stay flat until March 2009 (spectacularly wrong!). Why was I wrong about TARP? I don't know. Congress chose to give lots of money to failed investment bankers, when that money could have been used in other ways. I still don't get that. Why was I wrong about the depth of the recession? I underestimated the impact of the housing and investment banking collapse on spending. Next time, I'll do more research on spending data before making predictions like that! In The Healthcare Debate (September 2009), I predicted that Congress would eventually pass a watered-down version of healthcare reform that increased coverage, at higher expense, but wouldn't actually fix the underlying economic problems. I was right! In The 2009-2010 Winter Forecast (October 2009), I predicted less than 450 inches of snow at Mt Baker for the 2009-2010 ski season. The result? WRONG. Baker got 634 inches. And that was a bad year. What did I learn about a bad snow prediction for Mt. Baker? Mt. Baker rocks. So those were the predictions I've made so far that I could measure. The tally so far? 7 right and 5 wrong. I'm happy with a better-than-50-percent hit rate! There were a few predictions that we won't know for a while. In Peak Oil, I predicted gas at $10 a gallon by 2018, and nationwide gasoline rationing by 2023. You heard it here first. Also, in TV Shows are Dead, I made several predictions about what will happen to television. But again, those are farther out (maybe by 2014 or 2015). Comments |
Related: predictions lists Unrelated: books economics energy environment geopolitics mathematics science |
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