Friedman, Walter: Fortune tellers: the story of America's first economic forecasters

Describing economic upturns and downturns as recessions and recoveries—namely as temporary deviations from a norm—is not an obvious thing to do. Still, this practice is commonplace in the vast majority of the courses and textbooks of macroeconomics. The same applies to ups and downs in financial markets’ valuations, where the actual values of stocks are often compared to their “normal” values. Investigating and giving insights as to how these pieces of conventional wisdom developed and gained ground in teaching and research is thus a worthwhile undertaking. With this intended task, the book of economic historian Walter Friedman nicely takes the reader in a journey backwards in time to the 1920s of the past century. It was then that a bunch of pioneers (Roger Babson, Irving Fisher, John Moody, Wesley Mitchell and others) started to think in terms of business cycle fluctuations while developing rudimentary and sophisticated tools to predict their occurrence. They first made economic forecasting gain ground as a discipline. They produced a wealthy of pictures and eye-catching graphs and numbers. It is also with their contribution that the number of American citizens owning stocks rose twenty times from half a million people at the start of the twentieth century to 10 million people at the end of the 1920s. Then as well as today, forecasting methods lie in between art and science, though. From which the title of the book: Fortune tellers.