The Long View Paul Ashworth: ‘Forecasting Is Difficult at the Best of Times, and This Is not the Best of Times’
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Jun 10, 2025 In this engaging discussion, Paul Ashworth, Chief North America Economist at Capital Economics and the 2010 Wall Street Journal Forecaster of the Year, delves into the complexities of the current economic landscape. He examines the impact of political shifts on forecasting accuracy, emphasizing the unpredictability stemming from recent tariffs and trade policies. The conversation also explores consumer sentiment trends and inflation risks, alongside the broader implications of AI and demographic changes on productivity and economic growth.
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Forecasting Requires Scenario Analysis
- Forecasting economic outcomes now is extremely difficult due to high policy uncertainty.
- Using scenario analysis and working assumptions is more effective than precise predictions.
Tariff Impact Is Unprecedented
- Current tariff impacts are vastly different from the 2018 U.S.-China trade measures.
- Larger tariffs and opposite currency movements make today's situation unique and more inflationary.
Consumer Sentiment Is Less Reliable
- Consumer sentiment data is less reliable due to sensitivity to inflation and survey response issues.
- Market-based inflation expectations do not show a big surge, so caution is advised interpreting sentiment drops.