Celebrated playwright, George Bernard Shaw, once famously quipped: "If all economists were laid end to end, they would not reach a conclusion."

So, how is it that two experienced, knowledgeable economists study and analyze the same data and each comes up with a different forecast for the nation's economy? Why do these experts so often disagre﷽e with one another? As we will see, there's no simple answer; there are many reasons for economists' differing opinions.

Two Competing Schools of Thought

The principal disagreement among economists is a matter of economic philosophy. There are two major schools of economic thought: 澳洲幸运5官方开奖结果体彩网:Keynesian economics and free-market, or 澳洲幸运5官方开奖结果体彩网:laissez-faire, economics.

Keynesian economists, named after 澳洲幸运5官方开奖结果体彩网:John Maynard Keynes, who first formulated these ideas into an all-encompassing economic theory in the 1930s, believe that a well-functioning and flourishing economy may be created with a combination of the 澳洲幸运5官方开奖结果体彩网:private sector and government help.

By government help, Keynes meant an active monetary and 澳洲幸运5官方开奖结果体彩网:fiscal policy, which works to control the money supply and adjust Federal Reserve interest rates in accordance with changing 澳洲幸运5官方开奖结果体彩网:economic conditions.

By contrast, the 澳洲幸运5官方开奖结果体彩网:free-market economists advocate a government "hands-off" policy, rejecting the theory that government intervention in the economy is beneficial. Free-market economists—and there are many distinguished advocates of this theory, including Nobel Memorial Prize winner 澳洲幸运5官方开奖结果体彩网:Milton Friedman—prefer to let the marketplace sort out any economic problems.

That would mean no government bailouts, no government subsidies of business, no government spending explicitly designed to stimulate the economy, and no other efforts by the government to help what the economists believe is the ability of a free economy to regulate itself.

Both economic philosophies have merit and flaws. But these strongly advocated and conflicting beliefs are a major cause of disagreement among economists. Moreover, each philosophy colors the way these warring economists see both the 澳洲幸运5官方开奖结果体彩网:macroeconomy and microeconomy. As a consequence, their every pronouncement and the 🌺economic forecast are influenced in laꦍrge measure by their respective philosophical biases.

Other Factors Affecting Economists' Opinions

Besides their elementary philosop🐻hical differences, disagreements🏅 among economists arise because of a variety of other factors.

Let's stipulate that economics is not an exact science, and often unforeseen influences may occur to derail the most successful forecaster of economic conditions. These would include but are not limited to, 澳洲幸运5官方开奖结果体彩网:natural disasters (earthquakes, tsunamis, droughts, hurricanes, etc.), wars, political upheavals, epidemics, pandemics, and similar isolated or widespread catast𒆙rophes. As a result, an x-factor must b🉐e included in every economic equation to account for the unknown and unpredictable.

Types of Data

When 澳洲幸运5官方开奖结果体彩网:forecasting the future of the economy—short-term, mid-term, and long-term—economists may study some or all of the followin꧑g dat⛄a, as well as additional data. Most economists have a personal opinion about what numbers are the most useful for forecasting the future.

• 澳洲幸运5官方开奖结果体彩网:Gross domestic product (GDP)
• 澳洲幸运5官方开奖结果体彩网:Inflation or 澳洲幸运5官方开奖结果体彩网:deflation rate
• Employment numbers
• Jobless numbers
• Market indexes
• 澳洲幸运5官方开奖结果体彩网:Housing starts
• Existing home sales
• Treasury interest rates
• Fed interest rate
• 澳洲幸运5官方开奖结果体彩网:Money supply
• The price of the U.S. dollar against foreign currencies
• Borrowing and lending trends, interest rates on loans
• Debt levels in various categories
• Personal savings rate
• Business and personal bankruptcy rates
• National debt
• Federal budget deficit
• Commodity prices, future and 澳洲幸运5官方开奖结果体彩网:spot market
• Personal income
• Industry sectors
• Mortgage defaults and delinquencies
• Supply and demand for various 澳洲幸运5官方开奖结果体彩网:consumer goods and services
• Capital expenditures of businesses and industries
• Consumer spending
• Consumer debt
• 澳洲幸运5官方开奖结果体彩网:Consumer confidence
• 澳洲幸运5官方开奖结果体彩网:Business cycles
• Monetary and fiscal policies

Why the Disagreement?

Assume now that three economists look at some or all of the above data and make three different forecasts for the U.ꦗS. ec🃏onomy.

• Economist A might say the economy will grow in the next two fiscal quarters.
• Economist B might say the economy will shrink in the next two fiscal quarters.
• Economist C might say the economy will remain flat for the ensuing two quarters.

Analyzing and interpreting economic data is both an art and a science. In its simplest scientific aspect, economics is generally predictable. For example, if there's a high demand for a product and the product is scarce, its price will go up. As the price for the product increases, demand for it will taper off. At a certain high price point, demand for the product will almost stop. Employment🌃 numbers are also a predictable indicator. If national employment is near 100%, then the economy will generally flourish, and employers will have to pay higher wages to attract personnel..

By contrast, when 澳洲幸运5官方开奖结果体彩网:unemployment is widespread, and jobs are scarce, wages and benefits decline b🌟ecause of♉ an over-supply of job applicants producing a negative impact on the economy.

The above factors are among the predictable elements of economics, and econom♑ists usually agree on them. However, when interpreting other data, the economic picture is not as clear, and dis𝓀agreements arise among the experts more frequently in this area.

Some economists may over-emphasize the importance of leading economic indicators while discounting the significance of inflation or ꧂the risk of inflation in a vigorously growing economy.

Some economists may misinterpret the data, and others may give too much or not enough weight to certain factors. Still, other economists have a favorite formula for predicting the economic future that may exclude certain items of data that, if considered, would project a different picture of future conditionsꦓ.

Because they have not analyzed a comprehensive mix of econ🍌omic data, their judgments may be at variance with economists who have taken all the significant data into account. Lastly, some economists build an element o🌟f the unexpected into their forecasting while others either leave it out completely or do not give it enough weight in their equations. Therefore, disagreements always occur. 

The Bottom Line

Although economics deals with numerical data and well-establis𓂃hed formulas that work to solve various problems and provide insight into economic activity, it is not completely empirical science. As mentioned, too many x-factors occur in the complex world of economics, thus surprising the experts and defying their forecasts.

澳洲幸运5官方开奖结果体彩网:Economists may be employed in a variety of different jobs. They may work for the government, for business, or in the banking, brokerage, or financial industries. They may hold positions on 澳洲幸运5官方开奖结果体彩网:Wall Street or in academia or work as journal💟ists. Each of these employers may have objectives or agendas that color the opinions of their economists, and the differing philosophical views of all economists provide fodder for honest disagreement.