Mother of all shocks elicits mother of all forecast errors

Professional Adviser
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Economic forecasters always tend to overreact to shock events and their predictions following 11 September are proving equally wide of the mark

It's a new month, a new quarter, yet the same old story: the economy is coming back gangbusters. The first piece of US economic information for the second quarter, reflecting activity that took place in March, was stronger than expected, a familiar refrain these days. The Institute for Supply Management's (ISM) purchasing managers' index added to February's 5-point gain, rising another 0.9 point in March to 55.6. The March reading is the highest in more than two years and represents a 41% increase from the October 2001 low of 39.5, which in retrospect represented overly pessimistic ass...

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