16 Times Economists Got It Wrong
Predictions don’t always pan out, even from the experts. These big economic missteps had surprising results. Here’s what went wrong and why.
1. The Great Depression’s Quick Recovery
During the early stages of the Great Depression in the 1930s, many economists and leaders, including President Hoover, predicted a quick recovery. Unfortunately, the depression lasted much longer and was more severe than anyone anticipated.
2. Japan’s Economic Dominance
In the 1980s, it was widely believed that Japan’s economy would overtake the U.S. and dominate the global market. However, Japan’s asset price bubble burst in the early 1990s, leading to a prolonged period of stagnation known as the “Lost Decade.”
3. The Dot-com Boom Lasting Forever
The late 1990s saw booming technology stocks and widespread belief that the internet sector would only continue to grow. The bubble burst in the early 2000s, leading to massive losses and business failures.
4. The “End of Oil”
There have been repeated predictions about the world running out of oil, with dire forecasts in the 1970s and again in the early 2000s. Advancements in technology and new discoveries have repeatedly pushed back these predictions.
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5. The Euro’s Success
When the Euro was introduced, there were optimistic predictions about its stability and potential to strengthen European economies. However, the Eurozone has faced significant challenges, including the debt crisis in several member countries.
6. The Failure of the Eurozone
Conversely, there were also predictions that the Eurozone would completely collapse, particularly during the debt crisis in the early 2010s. While the Eurozone has faced significant challenges, it has managed to remain intact.
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7. The 2008 Financial Crisis
Many economists failed to predict the 2008 financial crisis, one of the worst economic downturns since the Great Depression. The collapse of the housing market and the ensuing global financial turmoil caught many by surprise.
8. Brexit’s Immediate Economic Impact
Some forecasts predicted immediate and severe consequences for the UK economy following the Brexit vote in 2016. While there have been challenges, the immediate economic collapse that some predicted did not materialize.
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9. Hyperinflation in the U.S.5
Following the financial crisis in 2008, there were predictions of hyperinflation in the United States due to the Federal Reserve’s quantitative easing. This hyperinflation did not occur, and inflation remained relatively low for years.
10. The Demise of Brick-and-Mortar Retail
With the rise of e-commerce, there were predictions that traditional brick-and-mortar retail would largely disappear. While online shopping has grown significantly, physical stores continue to play a major role in the retail landscape.
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11. The “Permanent Plateau” Before the 1929 Crash
Before the stock market crash of 1929, leading economist Irving Fisher famously declared that stock prices had reached a “permanently high plateau.” This prediction was followed by one of the most significant market crashes in history.
12. China’s Economic Slowdown
There have been repeated predictions that China’s rapid economic growth would slow dramatically. While growth has moderated, China’s economy has continued to expand more than many economists expected.
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13. The Fall of the U.S. Dollar
Several forecasts have predicted the demise of the U.S. dollar as the world’s reserve currency. While the dollar has faced challenges, it remains the primary global reserve currency.
14. The End of Inflation in the 2010s
Some economists believed that inflation was a thing of the past, especially after the financial crisis of 2008. However, various factors, including pandemic-related disruptions, have shown that inflation can still be a significant economic issue.
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15. The Collapse of the Canadian Housing Market
For years, experts have predicted a collapse in Canada’s housing market due to high prices and overbuilding. While the market has cooled at times, a broad collapse has not occurred.
16. The “Peak Oil” Theory
The theory of “peak oil” suggested that global oil production would soon reach a peak and then decline, leading to major economic and societal disruptions. However, new extraction technologies and the discovery of new reserves have pushed back these predictions.
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