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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Prioritize Hard Economic Data
- Place more emphasis on hard data like payroll and retail sales rather than soft survey data.
- Soft data surveys have weakened in accuracy due to lower response rates and poor correlation with actual economic activity.
Inflation Is Bigger Concern Than Recession
- Tariffs and immigration curbs are stagflationary, mildly hurting growth while pushing inflation up.
- Inflation is currently a bigger concern than recession, but tariffs should cause only temporary inflation increases.
Replacing Powell Won't Guarantee Lower Rates
- Removing Fed Chair Powell may not lower interest rates due to FOMC dynamics.
- Replacing the entire Fed board to control rates would be disruptive and damage Fed credibility.