Tape 157 - The future revealed
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- | Welcome once again as MIT Professor Paul Samuelson | 0:02 |
discusses the current economic scene. | 0:05 | |
This series is produced | 0:07 | |
by Instructional Dynamics, Incorporated. | 0:08 | |
This program was recorded July 8th. | 0:10 | |
- | I've just received in the last couple of days, | 0:13 |
two 10-year forecasts. | 0:17 | |
They're by | 0:20 | |
organizations with a good track record. | 0:23 | |
Chase Economics is one of them. | 0:25 | |
You've heard me speak of the track record | 0:27 | |
of Dr. Michael Evans of Chase, | 0:30 | |
a wholly owned subsidiary of the Chase National Bank. | 0:32 | |
But produced by computer and intelligence | 0:36 | |
out of Philadelphia. | 0:39 | |
And the other is by the Townes and Greenspan organization. | 0:41 | |
Which means Alan Greenspan, the | 0:45 | |
brains and heart, and soul of that organization. | 0:50 | |
I thought I might share with you | 0:57 | |
what their long run vision is. | 0:58 | |
Let's use as our benchmark, | 1:03 | |
the last year for which we have reasonably solid facts. | 1:04 | |
I'm referring to 1973. | 1:08 | |
I call the facts reasonably solid, | 1:11 | |
because of course, the 1973 data will still | 1:13 | |
be open to revision. | 1:17 | |
But, we do have the Consumer's Price Index for that year. | 1:20 | |
We do have the real Gross National Product. | 1:24 | |
We do have the real | 1:26 | |
Government Expenditure on Goods and Services. | 1:29 | |
We have the estimate of dollar profits after taxes. | 1:31 | |
And, we have the interest rate, let's say as measured | 1:36 | |
by the AA Corporate Bond rate. | 1:43 | |
Now, what will these same magnitudes be like in 1982? | 1:48 | |
It's not given to all of us to have a view, | 1:53 | |
a peek into the far future. | 1:57 | |
But, certainly, you can ask yourself what you'll | 1:59 | |
be doing in 1982, and you'd like to know | 2:03 | |
where the Consumer's Price Index will be. | 2:06 | |
So, let me report to you what the consistent forecasts | 2:10 | |
by the two different services, | 2:15 | |
each with a good track record, | 2:18 | |
what their best guesses are. | 2:21 | |
I say best guesses, because I think they would | 2:24 | |
be the first to insist that | 2:26 | |
there is no | 2:31 | |
great precision possible in forecasting 10 years ahead. | 2:33 | |
But, these are reasonable extrapolations based upon | 2:37 | |
the most reasonable way of interpreting available evidence. | 2:41 | |
Available evidence on present and past economic data, | 2:48 | |
and patterns of relationships. | 2:53 | |
Well the Consumer's Price Index in 1973, was 133. | 2:57 | |
That means it was just 1/3 above the base period of 100. | 3:04 | |
And, according to these forecasts, | 3:10 | |
let me start with say, | 3:13 | |
let's do it alphabetically. | 3:16 | |
Let's start with Chase Econometrics, 222.6. | 3:18 | |
And according to Townes and Greenspan, 247.4. | 3:24 | |
If we sort of go halfway between them, | 3:30 | |
you might say, 235 would be the estimate. | 3:33 | |
Now, | 3:38 | |
I don't know whether you'll find that disappointing, or not. | 3:40 | |
I suspect that you will find it | 3:42 | |
a pleasant surprise rather than otherwise. | 3:46 | |
Because it means that | 3:48 | |
in a full 10 years, the Consumer's Price Index, | 3:50 | |
the one that concerns the most of us in our | 3:54 | |
lives as ordinary citizens, | 3:58 | |
it will not have doubled. | 4:03 | |
The doubling would be 266. | 4:05 | |
Of course, it's not too good a story. | 4:08 | |
If it were too good, if it were 133, or 100. | 4:10 | |
You just wouldn't believe it. | 4:14 | |
This is just within the realm of the believable. | 4:17 | |
This represents about a | 4:21 | |
6 1/2% rate of price increase, | 4:26 | |
for the Townes and Greenspan guess. | 4:32 | |
So I guess a little bit less than that | 4:37 | |
for the Chase Econometrics guess. | 4:39 | |
Taken at what it is, I think that's reassuring | 4:45 | |
to any of us who have been concerned that | 4:51 | |
the present 12, 13% annual rate of price inflation, | 4:54 | |
Consumer's Price Index, that that will never be reversed. | 5:00 | |
That's the new steady state, which at best we can hope for | 5:05 | |
as we move into the so-called double digit | 5:09 | |
Banana Republic | 5:12 | |
cantering, modern inflation of the age. | 5:15 | |
What about Real Gross National Product? | 5:20 | |
After all, prices are just the tokens. | 5:23 | |
They can be darn uncomfortable when they're high | 5:26 | |
and when they're rising. | 5:28 | |
And they can have real effects upon the real magnitudes. | 5:29 | |
But what about the Real Gross National Product | 5:33 | |
of the American people? | 5:36 | |
Well, let me give you a benchmark. | 5:39 | |
The benchmark is for 1973, | 5:42 | |
the Real Gross National Product was, | 5:45 | |
837 billion. | 5:49 | |
Those were in 1958 dollars. | 5:54 | |
You can think of it I guess as just about 7/8 of a trillion | 5:57 | |
dollars, something like that. | 6:02 | |
Or 5/6 of a trillion dollars might be more accurate. | 6:03 | |
Now, | 6:10 | |
where will be in 1982, 10 years later? | 6:11 | |
10 years later counting '73. | 6:17 | |
Will we be at the same level? | 6:20 | |
Will there be no growth because of pollution concerns, | 6:21 | |
because of exhaustion of national resources? | 6:25 | |
Because of the movement towards zero population growth, | 6:29 | |
and zero economic growth? | 6:32 | |
(speaks foreign words) | 6:38 | |
Well, not according to our authorities. | 6:42 | |
Again, sticking with the alphabetical order, | 6:46 | |
the Chase forecast will be at 1,140.6 billion. | 6:50 | |
I'm giving you all the decimal places. | 6:57 | |
Of course the decimal places don't represent | 6:58 | |
the actual accuracy of the data. | 7:00 | |
They just represent what has to be carried in the computer, | 7:02 | |
just as a check upon the gross numerical accuracy | 7:06 | |
of the computations. | 7:12 | |
That represents about a 3 3/4% annual rate of growth. | 7:14 | |
And when we turn to Townes and Greenspan, | 7:22 | |
the picture is pretty much the same. | 7:27 | |
It's a little bit more pessimistic. | 7:29 | |
Just as Townes and Greenspan's been a little more | 7:34 | |
pessimistic on the price front, | 7:35 | |
so it's a little more pessimistic | 7:38 | |
on the real growth front. | 7:40 | |
It's 1,090.3, and I work that out to be about | 7:41 | |
a 3 1/4% rate of growth. | 7:46 | |
Of course, if I were really modern and had right | 7:50 | |
in front of me, the new computers, | 7:53 | |
which anybody can have for just a few hundred dollars, | 7:59 | |
I could zip in these numbers and give you | 8:02 | |
the exact percentage increase. | 8:05 | |
It's something very different I can assure you, | 8:09 | |
from the days when I was a graduate student, | 8:11 | |
and one had to punch out at great length on a | 8:13 | |
Monroe or Marshant calculator, tedious computations. | 8:16 | |
Well, | 8:21 | |
let's take the mean between the two estimates | 8:22 | |
and we have have a 3 1/2% rate of growth. | 8:25 | |
Now you may say, isn't that a bit on the disappointing side? | 8:30 | |
Because we're always hearing the numbers of about 4%, | 8:34 | |
of being par for the American economy. | 8:38 | |
Well, 4% has been par for the American economy | 8:40 | |
in recent years, but remember we're moving 10 years ahead. | 8:44 | |
And, just to give an example of how you have | 8:47 | |
to keep readjusting the potential trend rate | 8:50 | |
for the United States, | 8:54 | |
you have to take into account the labor force. | 8:55 | |
How can one accurately forecast population | 8:59 | |
as long as 10 years ahead? | 9:02 | |
The answer is very simple if we're talking | 9:05 | |
about labor force, because anybody who's going | 9:06 | |
to be in the labor force 10 years ahead, | 9:09 | |
the labor force that counts, which would be | 9:11 | |
the age 18 and over age 20 and over, is already born. | 9:13 | |
Unless there are some very great surprises | 9:18 | |
with respect to the life table of adolescents | 9:21 | |
and young people, we can pretty much predict | 9:26 | |
hoe many people there will be available for work. | 9:30 | |
Of course what we can't predict with the same | 9:33 | |
actual precision is how many people will be in college, | 9:36 | |
and therefore, some assumptions have to be made. | 9:40 | |
And I think the usual assumption made is, that | 9:43 | |
the leveling off in the college population | 9:47 | |
will pretty much guide what's going to happen. | 9:52 | |
We also have to make estimates | 9:56 | |
of how many people retire early. | 9:57 | |
And here, since there has still been a trend | 10:00 | |
towards early retirement, this is built into the estimates. | 10:02 | |
The more difficult matter is the increase in participation | 10:08 | |
of females at the | 10:12 | |
middle and prime working ages. | 10:16 | |
And the best that can be done here | 10:21 | |
and this is what I'm sure our forecasters have done, | 10:22 | |
is to extrapolate the most intelligent reading | 10:26 | |
of trends up until now. | 10:31 | |
If there's any sign of that process decelerating, | 10:34 | |
that's taken into account in the estimates. | 10:37 | |
The result is that | 10:41 | |
we will have some slow down in the rate of growth | 10:44 | |
of total people in the labor force, | 10:48 | |
in comparison with the earlier years. | 10:52 | |
You might think that we would also have a slow down | 10:56 | |
in the number of hours worked per week. | 10:58 | |
But, very surprisingly, | 11:00 | |
despite almost all past history, | 11:03 | |
in the last 20 odd years there's been almost no change | 11:06 | |
in the average work week. | 11:10 | |
If anything, if you compare just 20 years ago with now | 11:12 | |
at the same stage of the business cycle, | 11:16 | |
you find that the average work week | 11:18 | |
is just a little bit higher. | 11:20 | |
So, all that I think is allowed for there, | 11:21 | |
and perhaps this is a mistake, | 11:24 | |
is an increased number of holidays. | 11:26 | |
'Cause that still is a dominant trend. | 11:28 | |
Still other adjustments have to be made. | 11:32 | |
We have to forecast what's going to happen to productivity. | 11:34 | |
And, I noticed that Chase Econometrics | 11:38 | |
has taken productivity per man hour, per person hour, | 11:41 | |
and has written that down from 2.6% per annum, | 11:46 | |
to 2.2% for the changed cost of energy. | 11:51 | |
Which is projected to carry forward in important degree, | 11:55 | |
not necessarily in comparison with right this moment, | 12:00 | |
but in comparison with prior to last October's | 12:02 | |
increase in the price of oil by the Middle East countries. | 12:06 | |
So, all in all, this gives rise to about a 3 1/2% rate | 12:12 | |
of Real GNP increase. | 12:19 | |
This is consistent I may say with unemployment | 12:23 | |
not growing chronically and increasing as a percentage | 12:27 | |
of the labor force. | 12:32 | |
By default these estimates, | 12:34 | |
I would probably have to fault them on the side | 12:37 | |
of low unemployment. | 12:39 | |
More precisely, since there are some differences | 12:43 | |
between the two estimators, | 12:46 | |
I'd better point out what they are. | 12:48 | |
The Chase forecast has unemployment | 12:51 | |
in the last part of the decade, | 12:55 | |
below 5%, whereas the Townes and Greenspan | 12:59 | |
has the unemployment rate | 13:03 | |
in the last part of the decade at above 6%. | 13:06 | |
And, therein I suppose lies the principle reason | 13:12 | |
for Chase's optimism on Real Gross National Product. | 13:17 | |
I think I ought to stand back from these numbers, | 13:22 | |
and see whether opinions are now changing | 13:26 | |
in comparison with an earlier time. | 13:29 | |
Some of you may remember that at the beginning of the 1970s | 13:32 | |
I quoted estimates by the OECD organization in Paris, | 13:37 | |
of how the seven principle industrial nations of the world | 13:42 | |
would be likely to grow within the decade of the 1970s. | 13:46 | |
So, we were talking then about the 1970 to 1979, | 13:51 | |
or 1971 to 1980. | 13:56 | |
We're talking now about a 10 year period | 13:58 | |
of two or three years later. | 14:03 | |
But, at that time it was expected that par | 14:05 | |
for the United States, according to the OECD, | 14:08 | |
was about 58% real growth for the decade as a whole. | 14:11 | |
Now it appears that looking forward for another decade, | 14:17 | |
at just slightly later date, | 14:22 | |
that according to our authorities, par is a bit below that. | 14:24 | |
We won't do as much as 50% during the | 14:29 | |
1973 to 1982 period. | 14:35 | |
That means we won't grow as much as we grew in the 1960s | 14:38 | |
in percentage terms, because I remember it, | 14:42 | |
the percentage increase in re-lop would grow | 14:44 | |
through the United States in the 1960s, | 14:46 | |
was almost precisely 50%. | 14:49 | |
This is after correction for inflation, | 14:53 | |
but not correcting for any changes in population. | 14:54 | |
Well, there is a little slowing down as we move, | 15:00 | |
I suppose, towards services as getting | 15:03 | |
a greater weight in the indicators. | 15:06 | |
And also it may be that we're shifting our emphasis | 15:11 | |
just a little bit towards NEW, | 15:15 | |
towards Net Economic Welfare, toward the things which | 15:18 | |
don't get figured into Gross National Product. | 15:22 | |
But, which really do add to the welfare, | 15:25 | |
or keep us from having a subtraction from our welfare. | 15:28 | |
So I find nothing discouraging | 15:33 | |
in these particular estimates. | 15:35 | |
In fact, let me show my hand here right now and say, | 15:37 | |
that I regard these forecasts | 15:42 | |
as rather on the optimistic side. | 15:46 | |
I would settle, if I can make a bargain | 15:48 | |
with the devil, or with the angels, | 15:51 | |
for this particular outcome. | 15:54 | |
And I imagine that most of us would. | 15:57 | |
You might be interested to know whether in 1982 | 16:02 | |
we're going to live under serfdom, | 16:05 | |
whether the government is going to preempt | 16:08 | |
most of the Gross National Product in real terms. | 16:11 | |
And, even more of the money national income | 16:15 | |
is gonna pass through the hands of the government, | 16:21 | |
and be involved in transfers, | 16:23 | |
welfare, social security and so forth. | 16:25 | |
When I don't have the estimates at my fingertips here | 16:27 | |
on government transfers, but I do have | 16:32 | |
what the real share of government expenditure will be. | 16:34 | |
And, if you can believe our authorities, | 16:39 | |
it's a pretty reassuring | 16:42 | |
viewpoint for those of you | 16:46 | |
who think that the best government is limited government. | 16:48 | |
Let's be even handed and let's begin this time | 16:54 | |
with the end of the alphabet. | 16:57 | |
And so, I ask | 16:59 | |
what does the Townes and Greenspan organization see | 17:02 | |
for the growth in real government expenditure | 17:06 | |
in the 10 years? | 17:09 | |
Real government expenditure, 1958 dollars in 1973, | 17:12 | |
was 144.7 billion. | 17:16 | |
That's 144, 145 on 837. | 17:20 | |
So you can see that the real expenditure was down | 17:26 | |
at about 1/5. | 17:30 | |
And, | 17:33 | |
according to Townes and Greenspan that's going to grow, | 17:35 | |
but it's gonna grow in 10 years, in real terms, only to 189. | 17:37 | |
That's a very small rate of growth. | 17:43 | |
In fact, since Townes and Greenspan thinks that there'll be | 17:48 | |
1090 at that time, | 17:51 | |
you've slip from a 1/5 of government expenditure | 17:56 | |
going to government, of national product going to government | 18:02 | |
in direct goods and services. | 18:05 | |
You've slip down to I suppose, below 1/6. | 18:07 | |
Indeed, if you look at how that's broken down | 18:12 | |
between federal and state and local, | 18:14 | |
since state and local still has to grow | 18:17 | |
for a variety of obvious reasons, | 18:20 | |
you find that | 18:23 | |
Alan Greenspan is, well how shall I put it? | 18:26 | |
I think from his viewpoint, | 18:31 | |
I would have to put it as extremely optimistic. | 18:33 | |
Because he has government expenditure, | 18:37 | |
federal government expenditure, | 18:41 | |
which is | 18:43 | |
by itself in 1973, 57 billion dollars, 1958 dollars. | 18:46 | |
It grows only by 1982 to 64 billion. | 18:52 | |
That's hardly more than where we were in 1972. | 18:57 | |
Now I have to ask myself, does anybody really believe that? | 19:04 | |
If you look at the past trends of government expenditures | 19:07 | |
on goods and services, if you look at the political trends, | 19:10 | |
I would add, but please disregard this. | 19:15 | |
If you look at the collective needs | 19:18 | |
that increasingly come to the fore in an affluent society, | 19:22 | |
and then a crowded society, | 19:26 | |
like our modern, industrial society, | 19:29 | |
does anybody really think that this is feasible? | 19:32 | |
Or is this a case of wishful thinking | 19:37 | |
on the part of Alan Greenspan? | 19:40 | |
Alan Greenspan, | 19:43 | |
is a prolific writer, so we know | 19:46 | |
what his general, social philosophy is, | 19:49 | |
and he takes, sorry to say I believe | 19:51 | |
a rather dim view of the effectiveness of governments | 19:54 | |
in spending our money. | 19:58 | |
So, I would think this would be a very pleasing | 20:02 | |
outlook for him. | 20:05 | |
But, I must say I wouldn't bet on it being so modest. | 20:08 | |
Now, by contrast, | 20:14 | |
instead of going up from 145, to 189 | 20:18 | |
as with Townes and Greenspan, | 20:22 | |
the Chase Econometrics model has it going up to 208. | 20:24 | |
Well, that's more, but it's not of a different | 20:30 | |
order of magnitude. | 20:33 | |
So, if you say 200 billion, from 145 to 200 billion, | 20:34 | |
that will pretty much be a mid number for our forecasters. | 20:40 | |
What about profits? | 20:47 | |
Profits after taxes, | 20:50 | |
will there still be a private enterprise? | 20:52 | |
Will there be a corporate enterprise that has enough | 20:55 | |
to pay out dividends and to plow back | 20:58 | |
into capital formation? | 21:01 | |
According to our forecasters | 21:04 | |
the answer to that is yes, definitely. | 21:06 | |
Profits after taxes in 1973, were about 70 billion dollars, | 21:10 | |
70.4 billion dollars. | 21:15 | |
And, Townes and Greenspan thinks that dollar profits, | 21:17 | |
this is not corrected for inflation, | 21:23 | |
will be 180.3 billion in 1982. | 21:25 | |
And, the | 21:29 | |
Chase figure is 163. | 21:34 | |
So, if you sort of split the difference between them, | 21:37 | |
you'd be at about 170 billion dollars. | 21:40 | |
That represents more or less 2 1/2 times the dollar profits | 21:43 | |
of the present. | 21:49 | |
Well you might say that suggests that stocks | 21:52 | |
are a great buy, because that suggests if the DOW indexes | 21:55 | |
at this moment at about | 22:01 | |
a little over 800, | 22:05 | |
and profits go up by 2 1/2, | 22:07 | |
you ought to multiply the DOW by 2 1/2. | 22:09 | |
And that'll give you something like 2,000. | 22:12 | |
Alas, it's not quite that simple. | 22:15 | |
Because remember, that the base upon | 22:17 | |
which is gonna earn these profits, | 22:20 | |
is going to be larger because of some new adapt | 22:22 | |
and new flotations by companies. | 22:27 | |
I tried for the purpose of this round up | 22:30 | |
to make a rough calculation of what this means | 22:34 | |
with respect to profitability for existing capital | 22:38 | |
that is just allowed to grow at whatever compound rate, | 22:44 | |
plus or minus it's gonna grow. | 22:50 | |
And that turns out to be very, | 22:52 | |
a complex calculation. | 22:55 | |
I would say that on this basis, | 22:58 | |
if profits behave this well, the | 23:01 | |
most that I want to state | 23:05 | |
is that | 23:09 | |
dividends will continue to grow over the years, | 23:12 | |
dividends on existing stock holdings. | 23:15 | |
And that stocks are not | 23:18 | |
grossly overpriced | 23:22 | |
at the existing level of the DOW Jones, | 23:24 | |
or Standard and Poor's, or comprehensive indexes. | 23:27 | |
These are, I remind you again, rather reassuring | 23:32 | |
10 year forecasts. | 23:36 | |
But, to what are you gonna compare the profitability | 23:38 | |
of common stocks? | 23:43 | |
I think you have to compare them | 23:45 | |
to what's gonna happen to interest rates. | 23:47 | |
Since the Consumer's Price Index has continued to rise | 23:52 | |
at 6 some percent, | 23:58 | |
that of course gets built into the forecast | 24:03 | |
with respect to interest rates. | 24:06 | |
Now, I have at hand here, only the forecast | 24:08 | |
for interest rates of the Chase model. | 24:12 | |
So let me report on what's going to happen | 24:16 | |
to Corporate AA Bonds. | 24:18 | |
They, in 1973, had a yield of about 7.88. | 24:21 | |
And, | 24:26 | |
they, in 1982 in the last part of the decade | 24:28 | |
that we're talking about, | 24:32 | |
are figured by Dr. Evans to have a yield of just about 10%. | 24:33 | |
Just a little bit above 10%, 10.11%. | 24:38 | |
So, | 24:43 | |
you see, that suggests that the real rate of interest | 24:44 | |
will be about 4% only, | 24:49 | |
because a 6% rate for the Consumer's Price Index | 24:52 | |
and a 10% rate for interest gives you about 4% real terms. | 24:57 | |
Perhaps a bit better than that in these forecasts | 25:02 | |
for the last part of the decade. | 25:05 | |
Which is a bit better | 25:07 | |
than has been the case recently. | 25:09 | |
In fact I believe that our | 25:13 | |
forecaster's computers have reversed recent trends, | 25:16 | |
which have been showing an increased share going to labor. | 25:19 | |
And a reduced share going to capital. | 25:23 | |
They're impressed no doubt, by the fact there seems | 25:26 | |
to have grown up a shortage of capacity | 25:28 | |
in many basic materials industries. | 25:31 | |
In paper and glass, and cement, | 25:34 | |
in degree in chemicals. | 25:38 | |
And no doubt that our public utilities | 25:40 | |
are gonna find themselves squeezed. | 25:44 | |
And that will show itself in a shortage | 25:45 | |
of growth of capital formation. | 25:47 | |
As time goes on. | 25:50 | |
Now, I should | 25:54 | |
make some caveats about these forecasts. | 25:58 | |
These are caveats which the | 26:01 | |
forecaster's themselves would make. | 26:04 | |
You'll notice that there's no great up and down | 26:09 | |
of the business cycle in these numbers. | 26:13 | |
Or rather, if you have the numbers before you | 26:16 | |
and you looked at them in detail, | 26:18 | |
you would find that there is some | 26:20 | |
build up of activity in 1975 and 1976 say. | 26:23 | |
Last part of '75 and '76, because nobody thinks that | 26:32 | |
'74 is gonna be a very great year. | 26:36 | |
We're in a year of stagnation. | 26:39 | |
And some allowance is made for that. | 26:42 | |
And so, there is actually some allowance made, | 26:45 | |
some ups and downs, in the rate of growth of real output | 26:48 | |
in the different years, as you move towards | 26:54 | |
the end of the decade. | 26:55 | |
Just to give an example, but this means nothing, | 26:57 | |
in 1977, according to Townes and Greenspan, | 27:00 | |
the rate of increase of Real GNP | 27:05 | |
will be 4 1/2%, that's better than average. | 27:08 | |
Then it drops to 2.7 in '78, 2.8 in '79, | 27:12 | |
goes up to 4.5 in 1980, down to 2.9 and 2.8 in '81 and '82. | 27:16 | |
Now, Alan Greenspan doesn't profess to know really, | 27:22 | |
whether 1981 is going to be a little bit worse, | 27:26 | |
or a little bit than 1980, that's too far away. | 27:31 | |
It's just that that's a consistent story, | 27:34 | |
which grows out of the present initial conditions. | 27:36 | |
And I think that both he and Dr. Evans would ask us | 27:39 | |
to look at these as kind of trim numbers. | 27:44 | |
But, to put in more or less at random. | 27:48 | |
At random dates in the last part of the decade. | 27:51 | |
A business cycle, | 27:54 | |
at least a mini business cycle, | 27:58 | |
not unlike the mini business cycles which we've seen | 28:00 | |
in the last years. | 28:03 | |
We just don't happen to know whether it's gonna | 28:05 | |
start out in '79, or '80 or in '81. | 28:06 | |
So, with that caveat, you do understand how these | 28:10 | |
are to be interpreted. | 28:14 | |
Now I haven't much time left. | 28:16 | |
I've given the picture, the broad picture. | 28:18 | |
You'll have to subscribe to the services to get the | 28:21 | |
detailed argumentation upon which this is based. | 28:25 | |
And that's of course where the value lies. | 28:28 | |
And also, to get the detail that's relevant | 28:30 | |
to your own decision making in your own interests. | 28:33 | |
But, what do I really think of this? | 28:37 | |
Well, I think these forecasts are good forecasts. | 28:42 | |
I could not make better forecasts | 28:46 | |
if I set out to do the same thing. | 28:49 | |
And forecast not unlike them | 28:52 | |
could have been made, and were made 10 years ago. | 28:55 | |
But of course, | 28:59 | |
what's happened in the last 10 years, | 29:01 | |
I mean from 1963 to the present, | 29:03 | |
or from 1964 to the present, or 1965 to the present. | 29:07 | |
What's happened could not have been foreseen | 29:12 | |
by the best forecasters. | 29:15 | |
You would not have foreseen the two digit inflation. | 29:17 | |
You would have not seen the | 29:22 | |
stagnation, relative stagnation of so many | 29:25 | |
of the Nixon years. | 29:29 | |
You would have been in the full flesh then, | 29:32 | |
of the John F. Kennedy, | 29:34 | |
early part of the 1960s set of slow, steady improvement. | 29:39 | |
And so it with these forecasts | 29:44 | |
I think that they're good benchmarks. | 29:47 | |
They are what could happen. | 29:50 | |
But I must say, in terms of what's been happening | 29:52 | |
around the world, | 29:55 | |
and what's been happening in our own country, | 29:56 | |
it seems to me, these are about as optimistic | 30:00 | |
as one could imagine. | 30:03 | |
And I would have myself to shade them | 30:04 | |
on the pessimistic side. | 30:07 | |
Although I think that our double digit inflation | 30:09 | |
will recede to 8 or 9%, | 30:11 | |
even within this year and going into the next year. | 30:18 | |
I am not persuaded that for the decade | 30:23 | |
we can be so optimistic as even 6 1/2% on the average. | 30:27 | |
And certainly I don't think we can get there | 30:34 | |
without a good deal more unemployment | 30:36 | |
in the middle part of the decade, | 30:39 | |
than seems to be built into most of these forecasts. | 30:41 | |
So, I have to remind ourselves once again, | 30:45 | |
that the best job that economists can do about economics | 30:51 | |
is better than what any other profession, | 30:55 | |
or discipline can do about economics. | 31:01 | |
But it's still is something which has to be taken | 31:04 | |
with a tremendous grain | 31:09 | |
of standard deviation and variance. | 31:11 | |
And I would myself, want to bias downward these numbers | 31:15 | |
in a less optimistic direction. | 31:20 | |
- | If you have any comments or questions | 31:24 |
for Professor Samuelson, | 31:26 | |
address them to Instructional Dynamics Incorporated, | 31:27 | |
450 East Ohio Street, Chicago, Illinois, 60611. | 31:30 |
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