Robert Samuelson laments the economists’ poor track record:
The faith in economics was, in many ways, the underlying cause of both the financial crisis and Great Recession — it made people overconfident and careless during the boom — and the basic explanation for the weak recovery, as stubborn caution displaced stubborn complacency. To regain relevancy, economists are searching for a new light bulb — or better use of the old one. Meanwhile, most are still sitting in the dark.
I could suggest a dozen reasons for the weak performance of economic predictions but I’ll limit myself to just three. First, it it far easier to justify giving the expected answer even if it’s wrong than it is giving a correct answer that opposes the present orthodoxy. That’s particularly true in the academy where the most prominent people got that way by giving the expected answer to any particular question on a reliable basis.
I would also suggest that the models that economists are using now no longer conform to reality. Rather than each country in the world having its own insular economy, unique factors of production and consumption, with trade between countries we have a single world economy in which elasticities vary by locality. Actions in any one locality affects the economies everywhere. When considering inflation you can’t just look here in the United States. The question is now how much inflation has U. S. policy created in China or Brazil?
Finally, economics is not physics and probably never will be. It’s a descriptive social science and relies on mathematics a lot less than it does on observation, understanding, and insight. The farther economists get away from the trenches of the economy where real people buy, sell, work, and plan, the worse their predictions will be.