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Hypermind vs. the consensus of economic forecasters

Summary:
There’s a new Hypermind NGDP prediction market, which you should definitely check out. It’s still early, but right now the mean forecast for growth from 2020:Q1 to 2021:Q1 is 3.05%. That suggests that money is a bit too tight. In contrast, the consensus forecast of economists, which is published by the Philadelphia Fed, shows monetary policy is right on course.  They don’t provide NGDP forecasts, but they do have RGDP growth and PCE inflation: If you combine the 1.8% RGDP growth with the 1.95% PCE inflation, it looks like the consensus forecast for NGDP growth is about 3.75% (albeit for 2019:Q4 to 2020:Q4).  Thus Hypermind forecasters expect nominal growth to be significantly lower than the consensus forecast of economists. Let’s revisit this post in about 18 months. PS.

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There’s a new Hypermind NGDP prediction market, which you should definitely check out. It’s still early, but right now the mean forecast for growth from 2020:Q1 to 2021:Q1 is 3.05%. That suggests that money is a bit too tight.

Hypermind vs. the consensus of economic forecasters

In contrast, the consensus forecast of economists, which is published by the Philadelphia Fed, shows monetary policy is right on course.  They don’t provide NGDP forecasts, but they do have RGDP growth and PCE inflation:

Hypermind vs. the consensus of economic forecasters

Hypermind vs. the consensus of economic forecastersIf you combine the 1.8% RGDP growth with the 1.95% PCE inflation, it looks like the consensus forecast for NGDP growth is about 3.75% (albeit for 2019:Q4 to 2020:Q4).  Thus Hypermind forecasters expect nominal growth to be significantly lower than the consensus forecast of economists.

Let’s revisit this post in about 18 months.

PS.  Each forecaster at Hypermind provides a distribution in their new set-up.  So those long tails are not point estimates of individual forecasters. 

Hypermind is actually much easier to use than you’d think.  I encourage people to participate.  You will help to move the economics profession out of the Stone Age and also win free money.

PPS.  The 5-year TIPS spread is 1.55%.  That’s for the CPI, and implies about 1.3% for the PCE.  If you add 1.3% to the Philly Fed’s 1.8% RGDP forecast you get 3.1%.  Interesting.  (I expect inflation to be higher than that.)

PPPS.  FWIW, I predict 3.4% NGDP growth (which includes 1.6% RGDP growth).  That’s midpoint between Hypermind and the Philly Fed.  I believe money’s a bit too tight.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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