Reading BNET1’s latest find from Bain & Co, it occurs to me that there’s rarely a day that goes by without a new (usually pessimistic) forecast about the economy, an industry, or an individual business.
But whose predictions should we heed — how reliable are the analysts and economists now (as opposed to 12 or 18 months ago)?
The UK’s pre-budget report raised serious questions as to how accurately the government could predict future growth (if you hadn’t harboured concerns already).
In the US, the National Bureau of Economic Research questioned the very definition of recession by claiming that the US had been in recession for 12 months. Merrill Lynch told us the very same thing about 10 months ago and was largely ignored.
A recent gathering of entrepreneurs and investment professionals only served to underline how hit and miss predictions can be. When asked to call the end of the recession, there was little consensus. Predictions ranged from six months to 10 years (the latter from Andrew Keen, who also predicted the demise of the “free” business model and is not without his critics.)
One investor said that the next six months would be largely determined by the mindset of those in business — their outlook would determine whether recession or recovery would win the day.
This seemed unrealistic — that resolutely positive thinking could so swiftly bring an end to economic turmoil the likes of which we’ve not seen in 18 or 79 years, (or ever, depending on who you believe).
That said, psychological outlook certainly works on the negative side — the NBER’s declaration of recession was enough to send the Dow plummeting (again).
So can we use reverse psychology to get ourselves out of recession?
