Michael Mandel, chief economist at Business Week, writes some harsh things about modern macroeconomics:
1) Year ahead forecasts of short-run growth, by and large, are terrible, because macroeconomists have developed no good way of forecasting structural productivity growth.
2) Year ahead forecasts of long-term interest rates, by and large, are terrible. On average, forecasts peg the interest rate next year as being equal to the interest rate today.
3) There's little agreement about the magnitude of the link between wealth and consumption, and whether it matters which kind of wealth it is. Forecasts about the effect of the stock market decline on consumption were way off.
4) The estimated "natural rate of unemployment" seems to move around unpredictably, as Samuelson says.
5) Even though macro models have formally included an international component for years, economists have continued to make policy suggestions as if the U.S. was still a relatively closed economy.
Macroeconomics fails the empirical test--it missed the biggest economic events of the past ten years, including the acceleration of growth in the mid-1990s, the tech investment slump of 2000-2002, the continued strength of consumption over the past 5 years, and even the housing boom.
Number 1 surprises me the most; I had thought macro forecasts through six quarters or so were pretty accurate. I wish he would document this claim. Numbers 4 and 5 also surprise me and again, I wish he would document the claims. The fairest criticism seems to me to be the last paragraph, but even there I would like to see more evidence. For instance, I would guess a number of macro models and modelers foresaw the "tech investment slump".