History of Economic Predictions and their Accuracy in the USA after 1990

This thesis explores the history of economic forecasting and the accuracy of economic predictions formulated after 1990 in the US. Economic forecasting in the US traces back to the end of the 19th and the beginning of the 20th century. The most significant person of all was Roger Babson, but the contribution of credit rating agencies as well as Harvard economists cannot be overlooked either. None of these, however, managed to predict the Stock Market Crash of 1929 and the ensuing Great Depression. The Great Depression gave rise to economic forecasting in the federal inst itutions as well, which became more active after World War II and the emergence of Keynesian economics as the main approach towards economic policies; meanwhile, economic forecasting employed the wisdom of the crowd method for the first time, with the Livingston Survey and Survey of Professional Forecasters as its leading sources. As the conclusion of the quantitative analysis implies, either one of these Surveys predicted the GDP as accurately as the federal forecasters in Greenbooks did. Moreover, they were more accurate in predicting inflation, particularly from the end of the 90s till the Great Recession. This economic decline was predicted by only a few forecasters. As the quantitative analysis suggests, the reason for accurate predictions of the Great Recession was first and foremost a pessimistic view of such forecasters on the US economy development, inasmuch as the rest of their forecasting was not as accurate as that.