An Economic Prediction That Actually Came True

Economists are notorious for making bad predictions. There are endless examples, but the first one that comes to mind is a book written by economist Kevin Hassett and co-authors entitled Dow 36,000. The title was their prediction of where the Dow Jones Industrial Index should be based on fundamentals. The book came out in the year 2000 with the Dow at about 10,000, substantially higher than it is today. The Dow’s highest point ever was in the 14,000′s.

Roughly a year ago, as 2007 came to a close, someone I knew asked for my prediction as to “Who or what will be making headlines in 2008?” for her newsletter. My response — which seems prescient now, but looked more wrong than the Dow at 36,000 halfway through the year — was “The low price of oil.”

I’m guessing John Tierney was getting a little nervous about his highly publicized bet with Matthew Simmons for a while there, although he looks to be in pretty good shape now — Tierney just needs a barrel of oil to be below $200 in 2010. While I don’t have any money riding on it, reputation-wise I’ve been rooting for oil prices to stay low since this 2005 blog post of mine.

Impressed by my 2008 prediction, my friend asked for another prediction for 2009. I decided to quit while I was ahead.

It inspired me, however, to come up with a new Freakonomics contest. Blog readers have two days to make one-sentence predictions as to the most unexpected major news story of 2009.

At the end of the year, we will revisit these predictions and award the standard Freakonomics schwag to the winners. By that time, there might even be SuperFreakonomics schwag available.

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  1. Cindy says:

    With an agreement for high-level nuclear waste disposal in place after a massive public education effort, America is finally going nuclear with 30 new plants under study.

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  2. J. Jonah Jameson says:

    Israel pulls out of the Holy Land.

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  3. Tucker says:

    China dramatically pulls out of US gov’t bonds.

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  4. William says:

    First: the appearance of core deflation, followed in a year or two by the return of double-digit inflation.

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  5. MHS says:

    The U.S. postal service will stop delivering mail on Saturdays.

    Barack Obama’s oldest daughter will get detention, and cable TV news will dedicate weeks to the story.

    Joe the plumber will die.

    The U.S., Mexico and Canada will make steps towards forming the North American Union.

    Iran will go pro-American.

    An academic will prove one of the Million Prize Problems.

    One of Sarah Palin’s children will be admitted to an elite university, and the media will argue, rightfully so, that he or she is not qualified.

    More than 60% of the public will have a favorable view of the Bush administration.

    The country will go through another week or BigFoot frenzy.

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  6. Jesse says:

    Despite Republican attempts to forestall its progress, the new administration is able to make major inroads in its new health care plan by proving the economic and health benefits of cutting out insurance companies., dropping the average cost of healthcare insurance by 25%.

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  7. Zachary says:

    Putin Resigns

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  8. Scooper says:

    Congress authorizes drilling in ANWAR after major mid-east meltdown stops oil supply to US.

    Okay. Maybe not so far fetched.

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