Macro Advisors is full of BS

They claim there is a missing piece of growth in the last two years as a result of austerity. Looking at the six quarters they  think they detect a downward trend. They match that to what they think are expected losses in with respect to anxiety about our austere government.  Bullshit, that last downward trend is driven by the one time adjustment to the tax change on New Years Eve and the dip in 2011 is way to early to be an effect of austerity.

The trend, since the crash, has been stable at about .5% growth on a period change. See the two dips that drive their forecast? What they do is create the confirmation model when they see a dip, adjust their coefficients and lo and behold, their model of austerity matches the dip.  The only austerity, at the time, was the rise and change in tax rates, which of necessity, involved taking gains prior to the effect, and losses after.  Thus, the tax change created the perfect opportunity for Macro Advisors to fool simple minds like, Kevin Drum.

Macro does what we call the heterskedastic thing.  Their is simply not enough data to tease out the effect of austerity, their study would show plenty of forecasting error..