The 5 Worst Predictions from 2006

The end of the year is high-season for predictions about the next year. Unfortunately, the so-called experts rarely get called out for their bad predictions (often based on bad or no analysis). Here are 5 predictions from last year that should give you pause about the predictions you see for 2007.

5. Elections: Throughout the course of the midterm election campaigns, polls and predictions were everywhere. ThinkProgress.org highlights statements from Karl Rove, Michael Novak, Dick Cheney, George Will, and others who predicted a good day for Republicans.

4. Weather: In May, the National Oceanic and Atmospheric Administration forecast an 80% chance of an "above-normal hurricane season" this year. It turns out that it was a below-normal season. To be sure, all forecasts have a confidence interval, and at least they gave a 5% chance in their forecast of a below-normal season. However, I'm including this in the list because of the over-confident statement from the same report saying "the main uncertainty in this outlook is not whether the season will be above normal, but how much above normal it will be."

3. Housing: The National Association of Realtors in 2005 predicted that national median existing-home prices are "expected to rise another 6.1 percent in 2006" and median new-home prices are expected to "grow by 7.3 percent". They further said that "the national median home price has never declined since good record keeping began in 1968." Unfortunately for sellers (and fortunately for buyers), that trend did not continue in 2006.

2. Business: In early 2006, Mad Money stock prognosticator Jim Cramer made several predictions about the business world. The headliner was that GM would file for bancruptcy. Here is a snapshot of GM's stock price over the past year. Cramer's other predictions included a Citigroup - Goldman Sachs merger, Comcast buying CBS, Rupert Murdoch buying the Wall Street Journal, and a Pfizer- BMS merger. Maybe next year.

1. War: The pre-war estimate for the cost of the war in Iraq was $50-60B, and we are now shooting past $300B. In addition, the administration is no longer willing to make budget predictions past the current fiscal year, relying instead on emergency spending bills. We'll see if Democratic control of congress has any effect on the accuracy of predictions related to the war in Iraq or if budgets will continue to be wishful thinking.

If you liked these, here are some bad predictions of historic proportions from rinkworks.com and 2spare.com:

• "I think there is a world market for maybe five computers." -- Thomas Watson, chairman of IBM, 1943.
• "We don't like their sound, and guitar music is on the way out." -- Decca Recording Co. rejecting the Beatles, 1962.
• "We will bury you." -- Nikita Krushchev, Soviet Premier, predicting Soviet communism will win over U.S. capitalism, 1958.
• "Stocks have reached what looks like a permanently high plateau." -- Irving Fisher, economics professor at Yale University, 1929.
• "It will be years - not in my time - before a woman will become Prime Minister." -- Margaret Thatcher, future Prime Minister, October 26th, 1969.
• "The horse is here to stay but the automobile is only a novelty, a fad." -- The president of the Michigan Savings Bank advising Henry Ford's lawyer not to invest in the Ford Motor Co., 1903.