Last week, we observed that the WSJ was also wondering about the Dismal set (The Mystery of the Awful Economists, part 2).
The Journal asked the Economists who had previously expected $50 oil to dampen economic growth what their thoughts were: “None feel that $50 oil will trigger a recession. Thirty-one percent said they feel oil would have
to be sustained at $80-89 a barrel to snuff out growth, while 48% believe crude would have to top $90.”
At the time, the Big Picture observed:
“To be fair, the economists may have been right this time — only a contraction may be more likely to take place in 2006 than in 2005.
No, I am not suggesting its guaranteed to occur, either then or now — its just that the percentages go up the more: 1) stimulus fades; 2) higher rates slow the real estate complex; 3) oil maintains increased prices for a longer time; and 4) the U.S. current account deficits continue.
Perhaps time will proven the Economists right. It would be ironic if they snatch defeat from the jaws of forecasting victory due to a bit of impatience . . .”
“The global economy will grow at a slower but solid pace in 2005, with higher energy prices paring expansion, the International Monetary Fund said Wednesday.
The IMF once again predicted uneven growth, with strong results by the U.S. and China, but sluggish performances in Europe and Japan.
In its latest World Economic Outlook, the IMF forecast overall growth at 4.3% this year, down from 5.1% in 2004. It projected the U.S. economy would grow 3.6%, down from 4.4% in 2004, but a bit better than the 3.5% rate it forecast in September. The IMF said it “welcomed the continued strong performance of the U.S. economy. With most forward-looking indicators remaining solid, the expansion is set to continue in 2005.”
Gee, that didn’t take too long to come true, did it? Turns out they were right after all.
UPDATE April 14, 2005 11:43a
Front page story of the WSJ today:
You had to see that one coming from miles away . . .
Global Growth to Slow Amid High Oil Prices
By WALID AL-SAQAF
THE WALL STREET JOURNAL, April 13, 2005 12:59 p.m.
Economy Shows Signs of Soft Patch As Oil, Rates Weigh on Consumers
Greg Ip and Jon E. Hilsenrath
The Wall Street Journal, April 14, 2005; Page A1