Economists were wrong again
113 of professional economists surveyed by Bloomberg expected a 0.25% rate cut
As you already know, the Fed cut interest rates by 0.50% on Wednesday delivering the first reduction since March 2020.
If you have been a regular reader of my content you should not be surprised by the size of the cut. This quote is from the Sunday’s market recap:
“As I wrote before, I would be leaning toward a 0.50% cut given Powell’s last speech and deteriorating job market data.”
Most economists, however, should feel materially surprised. Only 9 out of 123 professional economists working at investment firms surveyed by Bloomberg expected a 50 basis points cut.
A staggering 113 economists were wrong and anticipated a 25 basis point reduction.
This is another proof that you should not believe mainstream economists in most words they say, especially at the end of an economic cycle.
Back in 2007, out of 54 economists, only 2 expected a recession. On average they projected that the economy would grow 2.1% from Q4 2007 to the end of 2008. As we know 2007-2009 ended up in the most severe recession since the Great Depression of the 1930s.
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