Marketplace All-in-One The messy, tricky, hairy task of economic forecasting
Jan 28, 2026
Susan Schmidt, portfolio manager who tracks markets and labor, and Chris Farrell, senior economics commentator, discuss the messy business of forecasting. They explore Fed signals and labor data. They debate why forecasts persist despite errors. They explain messy data, forecasting limits, and why ranges and scenario planning still help decision making.
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Layoffs vs. Overall Employment
- Big layoffs at firms like Amazon and UPS make headlines but most U.S. employment is at smaller firms.
- Susan Schmidt says the Fed watches unemployment broadly to judge rate impacts, not just headline cuts.
AI Optimism Powers Market Sentiment
- Investors are optimistic about AI boosting productivity, which supports current market strength.
- Susan Schmidt cautions valuations may outpace what AI can realistically deliver.
Forecasts Are Flawed But Useful
- Forecasts are often wrong because data is messy, revised, and future events are uncertain.
- But forecasts still provide useful planning ranges that help households, businesses, and policymakers prepare.