STOCK MARKET WATCH -- Monday, 3 March 2014

[jtuck004]

13. A Dire Economic Forecast Based on New Assumptions

FEB. 27, 2014
By FLOYD NORRIS, WSJ

The part of the past that you deem most relevant can be critical in determining your outlook for the future. And nowhere is that clearer than in the changing economic forecasts that come out of the Congressional Budget Office.

This year’s short-term and long-term economic forecasts are substantially worse than last year’s, even though the economy performed better than expected in 2013. What changed was that the C.B.O. economists essentially decided that they would no longer treat the recent years of poor economic performance as a sort of outlier. They have seen enough of a slow economy to begin to think that we should get used to sluggishness.

They think that Americans will earn less than they previously expected, that fewer of them will want jobs and that fewer will get them. They think companies will invest less and earn less. The economy, as measured by growth in real gross domestic product, will settle into a prolonged period in which it grows at an average rate of just 2.1 percent. From 2019 through 2024, job growth will average less than 70,000 a month.
...
It is a dreary, depressing prospect.

It is also almost certainly wrong.
...
I have no reason to doubt that the economists at C.B.O. are sincere in their pessimism. But it would be good if there were an alternative forecast out there — one that assumes the sky is not going to fall, and that the fact the economy has been weak does not indicate that it will always be so, any more than the strong economy of the 1990s was proof that the strength would endure indefinitely. Perhaps a group of economists, possibly including some C.B.O. alumni, will take on that task.

Here.

Forecasts here.

He wants to rely on hope.