Looking Back at 2011: Our Forecasting Hits and Misses

In 1941, baseball great Ted Williams batted .406 for the season, making him the last major leaguer to bat over .400 -- that is, collect a base hit slightly more than four times out of every 10 at bats. It's impossible to assemble sound statistics on our batting average -- for one thing, there's no umpire behind the plate calling balls, strikes and fouls, much less umps in the field to declare a ground-rule double.

But at the end of each year, we do take a look back at major forecasts to see how we did. Although we might not deliver a performance worthy of Williams, we're at least in the neighborhood of Albert Pujols and Matt Kemp -- solid hitters that any team would be glad to have.

On the economy and stock market, we had the trend going in the right direction, though the pace of improvement was considerably slower than anticipated.

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The ongoing economic recovery not only lacked the benefit of a usual postrecession pickup in housing, but it also ran into some unusually stiff headwinds in 2011: The tsunami and earthquake in Japan that disrupted supply chains for U.S. auto, electronics and other businesses. The far-reaching wave of Middle East political and social unrest that threw crude oil markets into high-anxiety mode last spring. And the inability of governments -- from Washington to Athens, Greece; Madrid, Spain; Lisbon, Portugal; Rome; Berlin; Paris; London; and Brussels, Belgium -- to grapple swiftly and effectively with stubborn annual budget deficits and mounting sovereign debt.

As a result, gross domestic product gained only about 2%, not the 3.5% we were looking forward to one year ago, and throughout the year we lowered our forecast. What's more, employment growth fell a million jobs short of the 2.5 million net additions to payrolls we forecast, though our expectation of a year-end unemployment rate still hovering near 9% is in the ballpark.

On the global economic side, we came closer to the mark. As we anticipated a year ago, the euro zone crisis is dragging Europe back into recession. Moreover, the value of the dollar has increased modestly, gaining about 2% against the weakened euro and twice that much against the yen, helping to strengthen U.S. exports.

Heading into 2011, we were looking forward to a relatively good year for the stock market, with the Dow Jones Industrial Average topping 12,500, and it did, hitting a high of more than 12,800 in the spring. Come summer, however, investor worries about the prospects of financial meltdown in Europe and Washington's dysfunctional response to a federal debt crisis sent markets into a steep plunge. But as 2011 comes to a close, an uptrend is once again in place.

Add to the list of successes these calls from 2011:

• "The U.S. debt ceiling will be raised, but only after another bitter fight" -- April 15, 2011.

• "About 100 banks will fail" -- Dec. 30, 2010. (The actual number was 92.)

• "Two million more home mortgage foreclosures" -- Dec. 30, 2010.

• "U.S. auto sales are headed for another healthy gain…. Total sales … to near 13 million" -- Jan. 7, 2011.

• "Many local governments face a painful 2011…. Jobs will be eliminated…. Less generous pensions and health benefits" -- Jan. 7, 2011. (Six states increased employee contribution requirements for pensions; 15 raised age and service requirements for retirement; 10 revised cost-of-living adjustments; and six made the calculation of retirement benefits less generous. And by Sept. 30, over 200,000 state and local government jobs had been eliminated.)

• "As oil prices climb, count on higher airfares to come along for the ride" -- Jan. 14, 2011.

(Anyone who bought an airline ticket in the past year knows how stingingly true that is. Average fares are up about 10% for both domestic and international flights.)

• "Fast-growing mobile commerce sales will double…. They'll hit … about $6 billion in 2011" -- Jan. 28, 2011. (In fact, they've climbed by 83% over the year.)

• "If you're a heavy user of your smart phone, expect to pay more for service" -- Feb. 4, 2011. (By July, major carriers had introduced new, tiered pricing schemes, slapping big data downloaders with higher charges.)

• "Muammar al-Qadhafi is done -- a matter of when, not if" -- Feb. 25, 2011. (He was killed on Oct. 20.)

• "The Interior Dept. is close to OKing expanded oil exploration in Alaska" -- May 20, 2011. (In October, the Obama administration offered up new areas for exploration.)

It's still early days on the 2012 campaign front, but nearly two years before the next presidential election, we provided our readers with some valuable insights. Among them:

• Sarah Palin wouldn't run, and we noted that one of the primary beneficiaries of her decision would be Newt Gingrich.

• Heading into 2012, Mitt Romney would lead the race for the GOP nomination. (Though some polls show him in a dead heat with Gingrich, in terms of money, organization and delegates, Romney has the edge.)

• And this, on April 22, when Donald Trump was conducting a very public -- and according to the polls, anyway, successful -- flirtation with American voters: "Take this one to the bank: Donald Trump will not be president."

Of course, we had our share of strikeouts, too. For example, Congress became so mired in partisan bickering that it failed to pass legislation that early in the year looked like winners: A compromise allocating unused broadband spectrum to both business and first responders. And an extension of payroll tax cuts through 2012 (although we still expect that to happen). A year ago, we also expected to say good-bye to Saturday mail delivery. By May, it was clear that despite the U.S. Postal Service's budget woes, abandoning weekend delivery was not yet in the cards.

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