What to expect in 2025 if economists’ forecasts are as bad as usual

By Steve Goldstein

No one has a crystal ball, and it shows every year when Wall Street professionals take a guess at what to expect in the coming year.

The St. Louis Federal Reserve analyzed figures from 21 years of economist forecasts collected by the Blue Chip survey of professional forecasters. The regional Fed tracked the widely followed survey of companies including Wall Street giants Bank of America and Goldman Sachs, as well as major manufacturers and insurers, over the period from 1993 to 2024.

The results? Predictions are as good as coin tosses.

For GDP growth, unemployment, and the 10-year Treasury yield, the percentage of years in which actual data fell within the range of the lowest 10 average forecasts and the top 10 average forecasts was less than 50 %; As for inflation, the situation was slightly better, at 56%.

What’s also useful about the St. Louis Fed study is that the bank looked at the scale of the failures. For GDP growth, for example, the average absolute forecast error was 1 percentage point, meaning investors should expect GDP growth in 2025 to be between 1.1% and 3.1 %, judging by the 2.1% forecast for this year.

The St. Louis Fed also looked at bias, whether the consensus deviated in a certain direction. The bias is only really significant for the 10-year Treasury BX:TMUBMUSD10Y, for which forecasters typically predict interest rates higher by 40 basis points on average.

-Steve Goldstein

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  01-02-25 0843ET
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