|Originally published in the March 2011 Socionomist|
On March 9, the UCLA Anderson Forecast issued a first-quarter report, “On the Mend,” which said the U.S. economy is “getting better.” The report points to recoveries in employment and real GDP and calls for “3% growth … for the duration of the forecast’s 2013 horizon.” A February 9 MSN article called last year’s 5% increase in cosmetic surgeries “one more indication that the economy is on the mend.” And, on January 17, an article in USA Today said, “The appetite for equities is going to continue to grow.”
Such forecasts are based on linear extrapolation. Robert Prechter called this habit “Predicting the Present” in his book The Wave Principle of Human Social Behavior:
Mainstream social and economic forecasting has forever been a practice of extrapolating present and recent conditions and trends into the future. More specifically, apparent predictions are simply (1) descriptions of present conditions (2) multiplied by an unconsciously calculated summation of multiple forward-weighted moving averages of the trends of those conditions.
Speaking before the World Futurist Society in Boston on July 10, 2010, Prechter pointed out that most people who try to predict look for “so-called cutting edge events, things that they think might start a trend. But every one of those events is simply an event. It doesn’t predict anything. That could be the first and only time it ever happens, like Nehru jackets.”
Economists’ and futurists’ reliance on linear extrapolation makes them “notoriously optimistic at tops and pessimistic at bottoms, producing highly inaccurate forecasts of coming events,” Prechter said in The Wave Principle of Human Social Behavior. And, in a world that not only trends but also turns, this approach is doomed to fail—sometimes, spectacularly.■
Socionomist is a monthly online magazine designed to help
readers see and capitalize on the waves of social mood that contantly occur
throughout the world. It is published by the Socionomics
Institute, Robert R. Prechter, president; Matt Lampert, editor-in-chief;
Alyssa Hayden, editor; Alan Hall and Chuck Thompson, staff writers; Dave Allman
and Pete Kendall, editorial direction; Chuck Thompson, production; Ben Hall,
For subscription matters, contact Customer Care: Call 770-536-0309 (internationally) or 800-336-1618 (within the U.S.). Or email email@example.com.
We are always interested in guest submissions. Please email manuscripts and proposals to Chuck Thompson via firstname.lastname@example.org. Mailing address: P.O. Box 1618, Gainesville, Georgia, 30503, U.S.A. Phone 770-536-0309. Please consult the submission guidelines located at https://3d8988.p3cdn1.secureserver.net/PDF/Socionomist_Submission_Guidelines.pdf.
For our latest offerings: Visit our website, www.socionomics.net, listing BOOKS, DVDs and more.
Correspondence is welcome, but volume of mail often precludes a reply. Whether it is a general inquiry, socionomics commentary or a research idea, you can email us at email@example.com.
Most economists, historians and sociologists
presume that events determine society’s mood. But socionomics hypothesizes
the opposite: that social mood regulates the character of social events. The
events of history—such as investment booms and busts, political events,
macroeconomic trends and even peace and war—are the products of a naturally
occurring pattern of social-mood fluctuation. Such events, therefore, are not
randomly distributed, as is commonly believed, but are in fact probabilistically
predictable. Socionomics also posits that the stock market is the best available
meter of a society’s aggregate mood, that news is irrelevant to social
mood, and that financial and economic decision-making are fundamentally different
in that financial decisions are motivated by the herding impulse while economic
choices are guided by supply and demand. For more information about socionomic
theory, see (1) the text, The
Wave Principle of Human Social Behavior © 1999, by Robert Prechter;
(2) the introductory documentary History's
Hidden Engine; (3) the video Toward
a New Science of Social Prediction, Prechter’s 2004 speech before
the London School of Economics in which he presents evidence to support his
socionomic hypothesis; and (4) the Socionomics Institute’s website, www.socionomics.net.
At no time will the Socionomics Institute make specific recommendations about
a course of action for any specific person, and at no time may a reader, caller
or viewer be justified in inferring that any such advice is intended.
All contents copyright © 2023 Socionomics Institute. All rights reserved. Feel free to quote, cite or review, giving full credit. Typos and other such errors may be corrected after initial posting.