Tags: oil | estimate | economists | tax

Economists' Projections Were Dismal in 2014

By    |   Friday, 09 January 2015 07:57 AM

The 2014 projections by respected economists fell far short in accuracy.

Prognosticating macroeconomic trends is a very difficult and uncertain endeavor. It becomes more daunting for didactic academics steeped in retrospective and reactive analyses, and less adroit in proactive, pragmatic and business oriented methodologies.

The average 2014 projections from economists surveyed by The Wall Street Journal were significantly higher than were the actual figures for several key macroeconomic indicators: 77 percent greater for the price of crude oil, 60 percent more for the 10-year U.S. Treasury interest rate and 46 percent higher for inflation that includes energy and food prices.

The consensus for crude oil at the end of 2014 was $94.65 per barrel: it came in at $53.27. In fact, this week, West Texas Intermediate crude fell further to as low as $48.51 on the NYMEX, the lowest price in nearly six years.

Likewise, the 10-year Treasury interest rate was estimated to close the year at 3.52 percent: the actual level was 2.17 percent. Inflation, including energy and food, was expected to clock in at 1.9 percent: it actually hit 1.3 percent.

The diminishing returns of accommodative monetary stimulation requires more effective fiscal reform to rejuvenate our economy.

Unlike the methodologies employed by many economists, the tax plan that I have proposed is a proactive measure that will help remedy our most pressing issues: increasing employment, stimulating sustainable economic growth and maintaining adequate purchasing power.

Broad swaths of the ideological spectrum, from liberal Democrats to conservative Republicans, have expressed positive views of this proposal, citing its fairness, efficiency and elegant simplicity.

My plan would: 1) streamline the tax code, 2) expand the tax base, 3) lower tax rates on savings and consumption, 4) balance the budget at current spending levels, 5) increase employment by lowering the cost of hiring and use of capital, 6) maintain low levels of inflation, 7) stimulate net capital inflows from abroad and 8) provide a strong safety net to the least advantaged by refunding the consumption tax for expenditures at least equal to the federal poverty level.

This policy can bridge the unfathomable political divide that has grown in recent decades and offer greater access to economic opportunities that promote employment and income growth for all socioeconomic strata, especially the lower and middle classes.

It's time for an economic and political rebirth in this country. We can do it now.

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The 2014 projections by respected economists fell far short in accuracy.
oil, estimate, economists, tax
Friday, 09 January 2015 07:57 AM
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