On June 1 The Wall Street Journal had an article titled “Analysts Cheer For Recovery.”
From the article: “Current estimates put the S&P 500 on track for earnings per share of $85.26 this year, according to Thomson Reuters, a return to 2007 levels. Analysts’ $96.61 forecast for 2011 earnings would mark a record that surpasses the 2006 peak.”
However, what I found most notable is a quote from Ed Yardeni, with regarding to analyst forecasts:
“They’re pretty good at anticipating earnings when the economy is expanding,” says Ed Yardeni, president of Yardeni Research, “but they typically don’t see recessions coming.”
One of the most notable aspects of the economic weakness of 2008-early 2009 was that economic forecasters almost completely failed to predict it. I believe that this is very significant for a variety of reasons; perhaps foremost is whether this inability to predict the last economic crisis is indicative of whether they will be able to foresee the next one.
I’ve put together some examples of forecasts in the 2007 to early 2009 time period; it can be found at this link (also listed under “Predictions” along the right-hand side of the home page).
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SPX at 1078.50 as this post is written