Predicting a recession, says economist Edward Leamer, is serious business. "Expect to be publicly embarrassed if your forecast is wrong,"...
Predicting a recession, says economist Edward Leamer, is serious business.
“Expect to be publicly embarrassed if your forecast is wrong,” he writes in the introduction to a report on recessions released by UCLA’s Anderson School of Management.
JPMorgan Chase, Goldman Sachs and others have joined the recession camp after predicting a mere slowdown just a few weeks ago.
Such views can sway investor behavior. On March 5, JPMorgan equity strategist Thomas Lee sounded an optimistic note on stocks, saying the firm would recommend being “buyers, not sellers of equities,” in part because his firm did not expect a recession.
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But two days later, after the firm’s economist made a recession call, he cut his S&P 500 forecast by 9 percent to 1,450 from 1,590.
That still would represent a gain, but a less robust one, Lee says. “A recession call is different than a ‘soft-landing’ call from an equity-investor perspective,” he says.
Since last month, the number of economists predicting a recession has risen to 60 percent, from 45 percent, according to a Reuters poll.
One economist who has been in the recession camp for some time is Merrill Lynch’s David Rosenberg.
“An official recession has arrived,” he said Jan. 7, when most of his colleagues were on the fence.