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A Partly Cloudy Year
January 10, 2025
Weather forecasters tell us what kind of weather we should expect. They can be wrong, but their short-term outlooks are generally reliable. The old joke that economists exist to make weathermen look good is funny because it has a ring of ironic truth.
Other things aside, though, we usually prefer moderate weather. Most of us would be satisfied if every day could be warm, partly cloudy, and a little light rain (like Puerto Rico). That nicely summarizes my 2025 economic outlook, too. I expect to “muddle through” another year. Storms are possible but they won’t do too much damage, and when 2026 gets here, we’ll all be fine.
A lot can happen in 12 months, of course. Today I’ll tell you what I think is coming. I should note that my sanguine attitude is making me very nervous. There are more wildcards this year than in any past year for the 25 years that I’ve been writing my forecasts.
Some big challenges loom over our futures. But right now, I’m talking specifically about 2025. Rough times are coming, yes, but I think we have at least 12 good months before the worst gets here. Let’s look at some of the reasons why things should be okay and then look at some of the potential problems,
Why We Forecast
Before I give you my forecast, let’s start with some thoughts about forecasting. I’ve said for a long time forecasts can be useful even when they’re wrong. Their value is not so much in the accuracy but in spurring us to consider the possibilities.
Tim Harford said the same in a...
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