So we come to our weekly meeting, and he asks me if I have understood why the trends go up in the forecast when they are consistently down in the historicals. Because he finds that strange. I tell him that they are up in the forecast because they are down in the historicals. The logic being that the economy cannot indefinitely depart from the long-run trend, so whenever it has departed from trend, the best guess for next year is that it will be closer to the long-run trend.

His response was along the lines of "but that's silly." I told him that yes, yes it is. But that is how these forecasts are made - it's a fundamental property of the statistical models in use. "By our guys down in forecasting?" he asked. To which I answered "by everyone. World Bank, IMF, Treasuries all over the world, Central banks, etc., etc."

The forecasts in question did not end up featuring in the final product.

- Jake

Friends come and go. Enemies accumulate.