Economic forecasters may be eagerly looking forward to
2015—if only to forget some of their off-the-mark projections from 2014. Looking
back at the projections made in January 2014 in The Wall Street Journal’s
monthly survey of economists, the picture isn’t pretty: Most economists
expected far higher oil prices, firmer inflation, a worse jobless rate and
higher interest rates than the year actually delivered. Here are the consensus
forecasts from January 2014 and the results:
Unemployment Rate
Projection for
December 2014: 6.3%
Actual (November
2014): 5.8%
Almost every economist saw the jobless rate at or above 6%
by the end of 2014. The consensus for the jobless rate at the end of
2015—5.8%—is right where the latest jobs report had it. The jobless rate should
stay low in 2015 unless the labor market deteriorates or potential workers
return to the labor force.
Payroll Growth
Average monthly change
in payrolls during next 12 months: 200,000
Actual (11-month
average through November 2014): 241,000
Professional economic forecasters tend to go wrong by being
too optimistic. Last year, it was the opposite as the labor market picked up
strength after a sluggish start.
Inflation
Projected annual
change in the consumer-price index for December 2014: 1.9%
Actual (November
2014): 1.3%
Credit the plunge in energy prices for the miss in
forecasting overall inflation. Excluding food and energy, annual inflation
clocked in at 1.7% in November.
Interest Rates
Projection for closing
yield on 10-year U.S. Treasurys in December 2014: 3.52%
Actual: 2.17%
This one is a real doozy for one of the world’s most
important interest rates. Every economist in the survey in January was far off
the mark in expectations for interest rates in 2014.
Crude Oil
Consensus for the end of
December 2014: $94.65 a barrel
Actual: $53.27 a
barrel
The year’s plunge in crude-oil prices, amid plentiful
supplies and tepid demand, was the biggest economic surprise of 2014.
GDP Growth
Full-year 2014
forecast: 2.8%
Actual: due in
early 2015
When the final numbers are in, economic growth probably
won’t be as strong as most economists expected. But the economy still appears
to have picked up in 2014, with a first-quarter weather-driven contraction
offsetting stronger output later in the year.
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