Pricey Jeans Give Hanmi CEO Leg-Up to the Top Rank of Forecasters
Sung Won Sohn can thank a pair of $250 denim jeans for his top place in The Wall Street Journal's annual U.S. economic-forecasting rankings.</br></br>Earlier in the year Mr. Sohn, economist and chief executive of Hanmi Financial Corp. in Los Angeles, was visiting a California jeans producer whose executives told him they couldn't keep up with demand for high-priced clothing. He figured "there must be money out there if people are willing to pay that much" for bluejeans. The insight -- along with reports from other clients that costs were rising -- led Mr. Sohn, 61 years old, to increase his 2005 projection for inflation and to stick with his call for healthy economic growth in the U.S.</br></br>The resulting prediction of growth of about 3.8% for the first three quarters and above-trend inflation of about 3.6% left him ahead of the pack when the results were tabulated. U.S. gross domestic product expanded, on average, at a 3.7% annual rate during the first nine months, and, as of November, the consumer-price index was up 3.5% from a year earlier. Most other economists had forecast lower inflation and a little less growth in 2005. (Preliminary estimates of fourth-quarter growth are slated for later in January.)</br></br>Also among the most accurate were J. Dewey Daane, a retired professor at Vanderbilt University in Nashville, Tennessee; Mickey Levy, chief economist at Bank of America in New York; Gail Fosler, chief economist with the Conference Board in New York; and Maria Fiorini Ramirez of MFR Inc., an economic-consulting firm in New York. All five had above-average inflation forecasts, and three of the five had above-average growth forecasts.</br></br>Many forecasters rely on econometric models to come up with forecasts for economic growth, inflation, interest rates and exchange rates. Mr. Sohn finds a little intuition comes in handy, too. "I talk to people on the ground," he says.