The new year is a time of reflection. For someone who comments upon the economy and provides analysis and forecasts, it should be a time to take stock and be honest about where I was right and wrong. I begin with my errors.
My columns contained few economic predictions, so empirical errors lie mostly in my technical work. In last year’s economic forecast, I predicted the start of an inflationary period. That has not yet transpired. My models of the economy suggested inflation should be of concern today, but it is not. In today’s highly charged political environment, this is often construed as a politically motivated analysis. It was not; I was simply wrong.
In a June column on unemployment, I predicted that the shortening of unemployment benefits in Indiana would lead to a modest surge in hiring in August. It did not.
In a July column on NAFTA, I employed intemperate language, deriding a commentator as a “village idiot” and suggesting that those who disagree with me on the issue share this label. While I am right on NAFTA, those who are wrong on the issue aren’t necessarily village idiots, just demonstrably in error. I am sure my column, though perhaps entertaining, changed few minds. I am sorry for it.
There were other errors, but these haunt me most. However, the year was not all bad.
I am proud of many things I remarked upon that seem outside the realm of economics. I think that civil discourse, shared sacrifice, the role of parents, how families behave and the rightly deep motivations for our foreign policy are more important than the short-term ups and downs of economic data that fill most business columns. I intend to continue to write upon these things to remind us all that the economy exists to serve life, not vice versa.
I believe the technical research by me and my colleagues at Ball State and my comments in this column on tax incentives and expenditures, local economies and government consolidation provided a lasting public service, as did our work with state government and four different think tanks. So, too, were articles on education reform and policy, which in Indiana saw a year of sweeping and much-needed change.
With three quarters of data in, my forecast of personal income growth in Indiana was less than a 10th of a percent off the mark. This is eerily accurate, but given the low growth I predicted, I prefer to have been mistaken. In January, my center published a study of gasoline prices and the possible effect on the Indiana economy if they reached $4 per gallon. This was a study that sadly proved too prescient.
What I did not write about also says something, and a good many readers made suggestions ranging from the challenges of retirement to international finance, which I intend to write about in 2012. I will also write plainly about new public policies, government, business and labor issues that matter to our economy.•
Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at [email protected]