Economic forecasts are not gospel
Mark Littlewood appears on talkTV
Harrison Griffiths writes in CapX
Mark Littlewood writes in The Times
“Because statistics around economic activity are very hard to collate and often subject to substantial revision, a good rule of thumb is largely to ignore numbers that follow the decimal point in reported growth figures. On forecasts or projections of growth a much wider margin of error exists. Estimates of growth in five years’ time, predicted to a decimal point, may be based on a highly complex algorithmic model but are almost worthless.
“A scepticism about forecasting and overly precise statistics doesn’t necessarily mean they should be jettisoned from policymaking. But in an era in which virtually every product and service seems to carry a health warning, it is strange that we report economic data in the context of simply being ‘independent’ or ‘expert’.
“As Neil Monnery notes in Architect of Prosperity, his biography of Hong Kong’s Financial Secretary, John Cowperthwaite, scepticism of statistics played a measurable part in the Hong Kong’s postwar success. To the irritation of the British authorities, Cowperthwaite always resisted the collection and collation of economic data for fear that the wrong sort of conclusions would be drawn. He simply applied broad economic principles to the territory rather than being sucked into a technocratic, data-driven approach. Perhaps the UK should be taking a leaf from his book.”
Read Mark’s full piece here.