Forecasting the 1937-1938 Recession: Quantifying Contemporary Newspaper Forecasts
Gabriel Mathy () and
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Gabriel Mathy: American University
Christian Roatta: The London School of Economics and Political Science
No 2018-004, Working Papers from The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting
Economic analysts were not able to forecast the Great Contraction of the early 1930s, as previous work has shown (Goldfarb et al., 2005; Mathy and Stekler, 2016). In 1937, with full recovery from the Depression still incomplete, another severe recession struck which lasted about a year. We use a well-established method to convert qualitative forecasts into quantitative scores and use these scores to study forecaster performance in this period. For the peak of the business cycle, we find similar results for this recession as for the 1929-1933 recession in that forecasters largely failed to forecast this downturn. Forecasters also remained overoptimistic throughout the recession, seeing a recovery as imminent, and failed to forecast the recession’s trough. We discuss similarities and differences with the performance of business analysts in the 1929-1933 and 1937-1938 recessions, as well as the methods and heuristics used to construct forecasts in this period.
Keywords: Macroeconomic Forecasting; Textual Analysis; Great Depression; 1937-1938 recession; Qualitative/Quantitative analysis (search for similar items in EconPapers)
JEL-codes: C53 E37 N12 (search for similar items in EconPapers)
Pages: 32 pages
New Economics Papers: this item is included in nep-for, nep-his and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:gwc:wpaper:2018-004
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