Why Economists Are Always Wrong But Never Uncertain: A Study in Professional Confidence
A comprehensive review of economic forecasts from 1990 to 2025 finds that economists predicted zero of the last four recessions with confidence, and predicted twelve recessions that did not occur, also with confidence.
Economics is often called "the dismal science" — a label coined by Thomas Carlyle in 1849, which economists note was not actually about economics being gloomy but about a different argument entirely. This has not stopped the phrase from appearing in every economics textbook introduction for 175 years, which economists describe as "a reasonable citation."
What separates economics from other disciplines is its practitioners' remarkable ability to explain, in precise retrospect, exactly why things happened in a way they did not predict. This is known in academic circles as "ex post rationalization" and in non-academic circles as "making it up after the fact." The Federal Reserve, the IMF, the World Bank, and most major investment banks engage in this practice quarterly, producing reports of extraordinary length and confidence that are immediately contradicted by subsequent reports of equal length and confidence.
The ReliableSorces Economics Department has reviewed this situation and concluded that we are no better at forecasting than professional economists, but we do it faster and with less jargon. Our predictions are issued with the same confidence and come with the same caveat: "past performance is not indicative of future results," which is the financial world's version of "we don't actually know."
Key economic concepts explained by writers who are very confident about their undergraduate memory of these.
Supply and Demand
When something is scarce, it costs more. When there's too much of it, it costs less. This is the entire foundation of economics, and economists have spent 250 years elaborating on it in increasingly complex ways. The core insight remains: things cost what people will pay for them.
Inflation
Inflation is when prices go up over time. It is caused by too much money chasing too few goods, supply chain issues, corporate pricing decisions, global events, and/or "the Fed," depending on who you ask and how angry they are at the time. Everyone agrees it is bad when it is high. Nobody fully agrees on how to fix it.
GDP (Gross Domestic Product)
GDP measures the total value of goods and services produced by a country in a year. It is the primary measure of economic health despite not measuring inequality, environmental cost, wellbeing, or anything you might actually care about. It is, however, a very large number, which is reassuring.
Recession
Technically, a recession is two consecutive quarters of negative GDP growth. In practice, it is when things feel bad economically and the news uses the word a lot. The National Bureau of Economic Research officially declares recessions, usually about a year after they've already ended, which is technically correct but not very useful.
Trickle-Down Economics
The theory that tax cuts for wealthy individuals and corporations will stimulate investment and economic activity that eventually benefits everyone. Proponents say it works given time. Critics say it has had forty years and counting. The trickle, economists note, has been described as "more of a mist."
Cryptocurrency
A digital currency secured by cryptography and decentralized across a blockchain. Its value is determined by supply, demand, speculation, a tweet from Elon Musk, and the phase of the moon (see: Science Facts). Proponents describe it as the future of finance. Critics describe it as "a casino where the house is also on fire."
What Famous Economists Actually Said vs. What People Think They Said
Economic quotes are second only to Abraham Lincoln quotes in terms of internet misattribution. We have investigated.
| Economist | What People Think They Said | Verdict | What They Actually Argued |
|---|---|---|---|
| Adam Smith | "Free markets fix everything, government bad." | OVERSIMPLIFIED | Smith supported free markets but also wrote extensively about moral philosophy, worker conditions, and the dangers of monopoly power. He would likely find modern libertarian interpretations of his work selective. |
| John Maynard Keynes | "Just print money whenever things go bad." | INACCURATE | Keynes argued for targeted government spending during downturns to stimulate demand, with the expectation of paying it back during good times. The "pay it back" part is less frequently cited. |
| Milton Friedman | "Greed is good." | WRONG PERSON | "Greed is good" was said by Gordon Gekko, a fictional movie character. Friedman did argue that a corporation's only social responsibility is to increase profits, which is adjacent but not the same as a movie villain quote. |
| Karl Marx | "Everyone should be equal and the government controls everything." | COMPLICATED | Marx's actual writings are extensive, nuanced, and widely misunderstood by both supporters and critics. His analysis of capitalism was largely separate from prescriptions for communist governance, most of which were developed by others. He famously said he was not a Marxist. |
| Thomas Malthus | "Population will always outgrow food supply and we'll all starve." | HASN'T HAPPENED | Malthus predicted in 1798 that population growth would outpace food production, leading to famine. Agricultural technology and demographic transition have repeatedly defied this. His framework influences population economics but his direct prediction has not materialized. |
Your Financial Questions, Answered Confidently
Prof. Reginald Wealthington IV answers your economic questions. He is not a financial advisor. Nothing here is financial advice. Please do not make financial decisions based on this column.