Now that the end of the year almost upon us, let’s take a look at the accuracy of the Amateur Economists predictions for 2015. The 2015 predictions were made in January 2015 and can be found here.
Prediction: – Extreme volatility in the stock market. Expect a day or two of down day of at least a 5-10% or more – with trading curbs used. Possible flash crash or catastrophic hacking event. MOSTLY CORRECT. Market volatility was extreme. VIX Chart. However, there was not a flash crash or other major hacking event.
Prediction: – Rising U.S. Dollar vs. Yen and Euro. Euro value at end of year €1.05 to $1.00. Yen value at end of year ¥130 to $1.00. To stimulate their economies, many countries will deflate/devalue their own currencies. CORRECT, though values off slightly. Actual Euro value at €1.09 vs. predicted €1.05. Actual Yen value at ¥120 vs. predicted ¥130. And yes, many countries continue to devalue their currencies.
Prediction: – Greece to leave the EU and/or special concessions to keep Greece in (devaluation of Greek debt, IMF intervention loan.) CORRECT. Special debt concessions and a third bailout. Read more about the Greece bailout here.
Prediction: – U.S. to have low quarterly GDP rates with one or two negative quarters. Texas enters a recession. MOSTLY INCORRECT. The U.S. did have lower than expected GDP rates, though none negative. Texas did not enter a recession.
Prediction: – After small Federal Reserve interest rate rise of .25% in early 2015, no more interest rate increases for 2015. MOSTLY CORRECT. The Federal Reserve did raise the rate .25% just once in 2015 as predicted, though waited until the end of the year vs. the predicted date of early 2015.
Prediction: – World-wide deflation (falling prices) of broad range of commodities throughout 2015. WTI oil to settle and stay in $50-$60/bbl range. HALF CORRECT. World-wide commodity prices have fallen as predicted, (see the sea of red and all the prices that have fallen here). WTI did fall as predicted, though to a much lower level, $30-$40/bbl range vs. the predicted $50-$60 range.
Prediction: – Chinese economic turmoil. Several large Chinese public companies announce accounting irregularities, which casts doubt over Chinese system of finance and controls and causes investor flight from country. China tightens, corrects or devalues Yuan to U.S. Dollar in effort to stimulate economy. Effort to flood U.S. with cheap imports. MOSTLY CORRECT. Though there were no major Chinese public companies that announced accounting irregularities, the Chinese economy is in turmoil. China also devalued the Yuan in August 2015 by 3% as predicted.
Prediction: – Greatest number of consolidations, mergers, acquisitions and bankruptcies of oil, exploration and production companies since 1980’s. INCORRECT. Though this prediction was incorrect for 2015, should oil prices stay at current levels, this prediction will, in fact, be the case for the new year of 2016.
Prediction – U.S. unemployment starts to rise in second/third quarter. INCORRECT. The unemployment rate continued to decrease throughout 2015.
Generally, out of 9 economic predictions for 2015, two were correct, five were mostly or half correct and two were incorrect. Not bad for an Amateur Economist.
Economic predictions for 2016 are on their way…