Supercharged Optimism
Charts of IMF global growth estimates vs.what has actually happened are either humorous or downright pathetic depending on your sense of humor. One thing sure stands out: Perpetual optimism reins supreme.
A few charts from the Wall Street Journal report Five Trends That Will Shape the Future of the U.S. Economy shows what I mean.
IMF Growth Estimates 2010-2010
Gap Between Predicted Growth and Reality
Only Saudi Arabia and Turkey have posted growth rates that exceeded their October 2010 projections.
Real GDP Pre-Crisis vs. Post-Crisis
Why anyone pays attention to IMF growth forecasts is a mystery.
Mike “Mish” Shedlock
Go back 1 more year to 2009 and see what they predicted. I suspect you did.
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Mish – if we are basically seeing a $2 gasoline price break from a few years ago and the US, on average, consumes 375M gal of gas per day, how do you see this trickling back through the economy and the growth affects? Not at all? Just curious of your take. …Brad R.
My thoughts. Growth doesn’t distinguish between people paying for gasoline or other purchases. People will shift spending from fuel to other items. That by itself won’t increase GDP unless businesses robustly invest in the manufacturing of the new things people are buying. But that will likely lead to a reduction in GDP because businesses are more likely to invest in manufacturing overseas, or Mexico, than in the US. Those increased imports will actually reduce GDP figures.
That doesn’t necessarily mean people are worse off however.
“Gap Between Predicted Growth and Reality”
Christine Lagarde:
“Political economy…proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people…and secondly, to supply the state or commonwealth with a revenue sufficient for the public services.”
My main message today is this: creating successful 21st-century economies requires robust government revenues and an international tax system that works for everybody. These ingredients are essential for growth, fairness, and development.
They provide the fertile ground for the prosperity of nations. And we at the IMF are ready to play our part for the benefit of our membership.”
Lagarde is failing. Greece has no prosperity. Look at what has happened to Ukraine since Lagarde became involved. Political economy, which Lagarde promotes, is a failure.
What is the unemployment rate in Lagarde’s France? Robust French government revenues and taxes, which Hollande had to cut back from 75% top rate, are not working for everybody. Also, apparently, Lagarde pays no income taxes, in her position as head of the IMF. She talks of fairness, yet she is apparently exempted.
Stop it Mish, your scaring all the chump investors!
Re: your misprint graph label “IMF Growth Estimates 2010-2010” – they’d even be wrong with that estimate.
If charts and graphs like that can’t be used to totally and forever publicly discredit the theories, models, and projections of Keynesian idiots (Keynsiots?), what in the hell can? And they attempt to centrally plan the world economies with THAT.
“The only function of economic forecasting is to make astrology look respectable.” – John Kenneth Galbraith
They are as bad in predicting as Mish’s weekly “we are entering a recession” articles of the last five years.
I think that the IMF reports GDP growth predictions from the countries own economists and government etc.
So it is biased.
The IMF needs to look at hard economic factors – eg population, exports, manufacturing, are these growing or falling.