Dean Baker: Why the Country's Top Economists Keep Making Wildly Stupid Claims

November 23, 2012  |  Anyone wanting to learn about the economy who talked to the nation's top economists in 2006 would have been wasting their time. Almost none of them had any clue that the collapse of the $8 trillion housing bubble was going to wreck the economy. This presumably reflects a rigid dogmatism and conformity on the part of these economists, since it should have been both very easy to recognize an unprecedented run-up in house prices as a bubble and also to understand that the collapse of the bubble, which was quite evidently driving growth, would lead to a severe downturn.

Remarkably, it seems from a Washington Post article [3] that attributes the continuing weakness of the economy to the indebtedness of underwater homeowners, that many of the country's top economists have no better understanding of the economy today than in 2006.The claim is the dropoff in consumption due to the debt burden of these homeowners explains the weakness of the recovery.