ARRA’s Economic Forecasts Disparaged

[This was an email I sent to Mark Cavanaugh, director of Colorado’s Economic Recovery Team, and to Greg Griffin, the Denver Post reporter who wrote the story, on Monday, August 3, 2009. I was incensed over the closing comment in the story, for reasons I address below.]

Dear Mr Cavanaugh,

I was disappointed to read that the Denver Post’s Sunday edition front page story ended with this quote attributed to you:

I have no idea where that number came from…I think it was pin the tail on the donkey.

— Mike Cavanaugh, Director of Colorado Economic Recovery program, page 6A, Denver Post, Sunday, August 2, 2009,
in referring to how the Obama administration developed its estimates of the number of jobs created by ARRA, the American
Reinvestment and Recovery Act

This was disappointing to read because (1) in the previous paragraph it was explained how the federal economists made the estimate, (2) it put you in the position of belittling and undermining the very mission of the Colorado Economic Recovery program which you are directing, and, finally, (3) disparaging the economics profession in general.

Don’t get me wrong: I don’t have much respect for economic forecasts either. However, I have worked as a professional economic consultant and have taught undergraduate economics for some years, and know well the obstacles that economists are up against when they are expected to deliver a forecast — but not given any reliable first-hand data sources on which to base them. So they do the best they can with what they’ve got — which often is not very much. The problem lies not so much with the economics profession itself, or its forecasting methodologies; rather, it is much like the old computer addage: GIGO, or Garbage In, Garbage Out. In other words, if the politicians and governmental administrators are unwilling to invest in better economic reporting systems, they will be forced to rely on such “donkey tail” forecasts; it is hardly the fault of the economists forced to work with the poor data.

It would not be surprising to hear that your remarks may have been taken out of context, and misrepresented by the reporter who wrote this piece; but, at any rate, it was an unprofessional and negative remark about a very serious topic. I’ve been unemployed myself since the end of last year, and sincerely hope that ARRA will have its intended effect.

Very sincerely,
Rick Casey

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