The news articles today all report on how the country's leading economists now believe that we currently are in, or soon will be in, a recession. This is big news, in fact it's bigger news than the reports suggest. As I've written in the past, economists have an enormous bias against seeing recessions. Virtually no economist saw the recession coming in 2001, even after the stock bubble was already well on its way to deflating (okay, none of them saw the bubble either). This includes all the official forecasters, CBO and OMB both projected solid growth in 2001. Economists don't predict recession. Economists don't predict recessions. (I'm not in the fraternity.) Say it one thousand times until it sinks in. Economists, when we are lucky, recognize recessions after we are already in them. The fact that so many economists are now willing to say that we are facing recessions should be viewed as a lagging indicator of a recession. It is very reliable -- I am fairly certain that there has never been a period in which a sizable share of economists forecast a recession (the WSJ puts the aggregate probability at 43 percent) and we have not actually been in a recession. Reporters should regularly remind their audience that their economic experts have an enormous bias against seeing recessions. It would allow them to place their assessments of the economy's prospects in better perspective.
--Dean Baker
