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Economic mis-predictions

On this day when NZ will greatly relax its restrictions on social behaviors put in place due to the Corona virus, it should be noted that many of the 'economists' regularly consulted by our mainstream media, some of whom own private consulting firms and others who work for big banks, appear to have largely got their economic forecasts wildly wrong.


For example, there was much talk about "Great Depression" levels of unemployment in this country. However, the Great Depression started in 1929 and lasted many years. It was still going strong into the mid-1930s. Unemployment went up to over 20% in America.


By contrast, as of today, the NZX 50 share index is almost 12% higher than one year ago. Our unemployment rate is still way below double digits. How serious the Kiwi recession turns out to be hinges on how long this health crisis lasts. Greg Mankiw, a former Chair of the US President's Council of Economic Advisers, notes that, unlike during the Global Financial Crisis in 2008, most of the rise in US unemployment in 2020 has, so far, been temporary and NOT permanent.

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