(This column originally appeared in The Hill)
Economists were wrong about inflation. They were wrong about tariffs. They were wrong about GDP growth and recessions and jobs and the labor market. But that doesn’t stop them.
As I write this, more than a few economists are predicting an economic downturn for this year. Some are saying there will be a “very significant” recession in 2027. They’re probably wrong about that, too
Whom should we to believe? Business owners like myself and my clients often rely on these predictions to help us make decisions about future investments, spending, expansion, hiring and strategy. But today, it’s pretty tough to take an economist’s forecast seriously, given their poor track record.
Like weather forecasters, “futurists” and other so-called experts, economists don’t really know what’s going to happen. Why? Because economic forecasts are structurally flawed.
Many economists get their data straight from the government, but that’s becoming an increasingly dubious source. In September, for example, the Labor Department reported that it had overstated job gains in 2025 by 911,000. That in itself would be disturbing if the same agency hadn’t already admitted that it had overstated job gains the previous year by yet another 818,000. GDP revisions can vary widely from original estimates, with even the popular statistician Nate Silver admitting that the history of economic forecasts has been a “complete failure.”
Business owners need better signals. An economist relying entirely on government data for predictions is handicapped, because most government data comes from surveys and other out-of-date methodologies, calling into question its validity. If you are making decisions based on that economist’s predictions, you are going to be handicapped too.
Keep in mind as well that economists are human beings, and humans are biased. The White House has its own biased economic team; The New York Times and The Washington Post have theirs. Milton Friedman, John Cochrane, Greg Mankiw, John Taylor and Stephen Moore are typically considered right-leaning. Paul Krugman, Thomas Piketty, Joseph Stiglitz, Jeffrey Sachs and Amartya Sen have traditionally leaned leftward. Many economists work out of academic institutions, where 60 to 75 percent vote Democratic, so that’s biased too.
Like reading any media site, it’s important to get your information from multiple sources and then figure out what’s real and what’s not.
I write about small and mid-sized businesses, and one thing that frustrates me about others in the media who cover the same demographic is that they report from isolation. They sit at desks in Washington or New York and get their data from the Internet or the occasional phone call or email. I speak to more than 50 business groups and associations a year. It is only because of this on-the-ground approach that I can get a deeper perspective of what’s really going on in their industries and regions.
The same goes for economists. Like some journalists, many work in isolation. They never leave their offices or their academic institutions. They’re not traveling the country, meeting with business leaders and seeing the real world — ports, production facilities, depots, distribution sites — and correlating that with their economic analysis. Unfortunately, it’s hard to find people in the field that bring that kind of perspective.
Like many people used to their routine, economists are at risk of being lazy. Once economists come up with a model or an approach or are being paid to deliver a regular report, they will likely stick to it with little change. It is much easier to accept data from a traditional approach than to think outside the box and question the approach.
Perfect example: the Department of Labor’s reports on jobs.
What is a job in 2026, when there are millions of people earning money from side gigs, freelancing and other independent entrepreneurial activities? Just because someone doesn’t have a full-time job, does that mean he’s unemployed? That definition has changed — it may have worked in 1976, but not today.
And yet few seem to be figuring out that income generation is a more relevant approach to determining employment than the age-old approach of asking how many employees there are.
Finally, know that most economists, like most people, are simply risk-averse. For someone to suggest a radical change to an economic methodology that has been used for years is to invite scrutiny, inspection and potential criticism. Why subject yourself to this risk — even if you know the data is becoming less reliable — when you could lose your job if you’re wrong? Isn’t it better to stick with the common narrative, receive your paycheck and get on with your life?
Economists are guilty of doing most of these things. And because of that, their assumptions and conclusions are frequently flawed. If you’re a business owner relying on economists to make your decisions, my advice is, don’t.
Instead, look for real data from real companies.
Get your jobs numbers from ADP and Paychex, the country’s biggest payroll providers. Each publishes employment data from its own actual, real-life system. Lean into industry reports like the Institute of Supply Management and the American Institute of Architects, who publish data received from their members. Forget those silly “sentiment” and “optimism” surveys. Instead, read earnings reports and watch CNBC. Listen closely to the executives from banks and retailers to find out how consumers and businesses are really spending and borrowing.
These are far better sources to get insight into the economy than listening to an economist.
