Confirmed pessimists on the economy can be excused for reacting with a big fat "I told you so" to the news today from the Wall Street Journal that its latest survey of economists had raised the chances of a U.S. recession occurring in the next 12 months to 36 percent.
Too bad the survey is essentially worthless. The monthly roundups are called "forecasts" but all they really tell us is the conventional wisdom prevailing in the moment, and for reasons not particularly clear, that wisdom almost always appears skewed toward the don't-worry-be-happy end of the spectrum.
Just for fun, let's review. One popular question posed by the Journal over the last year has been to ask whether or not "the worst of the housing bust is behind us."
In November 2006, 65 percent of the economists surveyed agreed: The worst is over.
In December 2006, 57 percent said the tide had turned.
In March 2007, an amazing 80 percent told us the worst was in our rearview mirrors!
Really, really wrong.
In April 2007, 71 percent said we'd seen the worst.
In May, the Journal did not ask the question. But in June, 74 percent said the baddest of the bad stuff was bye-bye.
In August, 64 percent were whistling a happy tune.
Strangely, in September, the Journal again did not ask the question.
The evidence that we've yet to hit bottom on the housing bust can be seen in mounting foreclosures, falling home prices, accelerating construction job losses, and a flood of red ink for homebuilders. But for the most convincing proof that a chill wind is getting more blustery, one need only review the latest prediction from the National Association of Realtors, an organization renowned for its steadfast cheerfulness in the face of all real estate data to the contrary. On Tuesday, the NAR revised its estimate for existing home sales in 2007 downward, for the seventh month in a row, to an 8.6 percent drop. New home sales, it declared, would plummet by 24 percent.
Maybe that's why the Journal didn't ask the question this month. It would have been too embarrassing.