An Honest Economist

Here is an interview of Robert Shiller on CNBC. I enjoy the fact that when they try to pin Shiller down, he in fact gives three "possible" futures:

• House prices could fall by another 50%


• The market is saying that house prices will be essentially flat (rise by 4% over the next 5 years)


• There could be another housing bubble

In short: he doesn't know what the future holds. The only thing he would be pinned down was to say "house prices will not fall by 100%", i.e. they will have zero value. He is honest but these financial reporters keep trying to get him to forecast the future. He can't. Nobody can. He gave three possible scenarios and indicated that the most likely one is that the housing market will be flat for the next 5 years.

He is honest about the financial mess the US is in. He says that the US is now into a "recovery" but he does not expect a return to "good times" in the foreseeable future, i.e. things will just bump along, just like house prices. That is bad news because a lot of people are hoping to get back to the good times of the 2003-2007 time period or the 1993-2000 time period. He just doesn't see this in the cards. But, as he admits, economists have no special skills in forecasting "animal spirits"...