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Economists are terrible at predictions, in one chart

Economists are really smart and highly trained. And they're often terrible at predicting the future.

A new analysis from Deutsche Bank's Torsten Slok (and tweeted by Business Insider's Joe Weisenthal on Thursday) shows that economists' forecasts of the 10-year treasury rate have been way, way off for more than a decade now.

10-year predictions vs actual

Source: Deutsche Bank

The dotted lines represent forecasts according to the Fed's Survey of Professional Forecasters. The 10-year rate matters for a lot of reasons beyond the rate of return on treasuries — it's also tightly linked to mortgage rates, for example. In addition, it can drive investment decisions — lower rates here tend to mean higher returns on stocks, as investors flock from bonds to riskier (but higher-reward) equities.

True, there were some crazy, unpredictable times for the 10-year in the last 12 years — when the US inched toward default in 2011, for example, the return on treasuries in fact dropped. But this chart only goes to show that in good times and bad, economists very often are terrible at looking into the future.

It's not just economists who are wrong; the market is sometimes, too. Businessweek also posted this chart on Wednesday (also from Slok), showing that federal funds futures have also been predicting a hike in the federal funds rate for five years now. That hike hasn't happened yet.

Fed funds futures

Source: Deutsche Bank