It's easy to make projections; it's a bit more difficult to make accurate projections. And far more projections are made than accurate projections. So why do we listen so intently to the experts' opinions, giving ourselves an emotional roller coaster, when they're probably no more likely to be right than you or me?
Let's take a look at Federal Reserve chairman Alan Greenspan's projections from 10 years ago this spring. (testimony given on March 2, 2001):
Both the Bush Administration and the Congressional Budget Office project growing on-budget surpluses under current policy over the next decade.
The most recent projections from OMB and CBO indicate that, if current policies remain in place, the total unified surplus will reach about $800 billion in fiscal year 2010, including an on-budget surplus of almost $500 billion. Moreover, the admittedly quite uncertain long-term budget exercises released by the CBO last October maintain an implicit on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation, especially on the major health programs.
These most recent projections, granted their tentativeness, nonetheless make clear that the highly desirable goal of paying off the federal debt is in reach and, indeed, would occur well before the end of the decade under baseline assumptions.
Yeah. Not quite dead-on accurate...
He did go on to warn about the potential for fiscal bloat:
With today's euphoria surrounding the surpluses, it is not difficult to imagine the hard-earned fiscal restraint developed in recent years rapidly dissipating. We need to resist those policies that could readily resurrect the deficits of the past and the fiscal imbalances that followed in their wake.
Seems like congress listened to & believed the first part of Greenspan's projections, but the second part never got through.
More importantly, if the top expert in the field - the one with more access to more information and resources than anyone else - can be so incredibly wrong in such a short time horizon, why do we bother to get wrapped up in so many projections?
Thanks to the Calculated Risk blog for digging this one up.
Your happy when he occasionally gets a projection right Realtor,