Fannie Mae Economist Berson Tops Forecaster List
Fannie Mae has had to restate earnings covering the past several years, but the company's economist got his numbers right for this survey. Mr. Berson accurately predicted that the nation's gross domestic product -- the most widely used barometer of economic growth -- would be above the consensus expectation of 3.5% growth in the first quarter of 2005. His forecast was 3.9%; the government reported Wednesday that the actual figure was 3.8%. Mr. Berson also nailed his forecast for the change in the consumer-price index, which advanced 2.8% for the 12 months through May.</br></br>Strong growth and inklings of inflation would normally lead to much higher yields on long-term Treasurys. But it didn't in the first half, and that is what really set Mr. Berson apart from other forecasters. The panel got walloped -- yet again -- by the bond market. The consensus among economists was that 10-year Treasury yields would rise from 4.2% in December to 4.8% by the end of June. But yields declined instead to 3.9%. Mr. Berson said they would rise to only 4.45%, making him less wrong than just about everyone else.</br></br>Mr. Berson, who has worked at Fannie Mae for 17 years, is a baseball fanatic whose favorite number-cruncher is Bill James, a cult hero among baseball fans for his statistical abstracts of the nation's pastime. Mr. Berson said he will keep his first-half home run in perspective. "I'm constantly humbled by bad forecasts in both baseball and economics," he said.</br></br>Right behind Mr. Berson was Lawrence Kudlow, the popular CNBC-TV commentator and head of the economic-consulting firm Kudlow & Co. He correctly predicted strong growth and a firmer dollar. Rounding out the top five were Mickey Levy of Bank of America Corp., Robert DiClemente of Citigroup Inc. and David Littmann, who retired from Comerica Inc. -- and our survey -- earlier this year.</br></br>The least-accurate forecasts came from James Smith, a University of North Carolina business-school professor who predicted that falling oil prices would push the consumer-price index into negative territory; Bob Shrouds and Robert Fry, DuPont Co. economists who forecast a sharp economic slowdown; and Ellen Hughes-Cromwick, Ford Motor Co.'s chief economist, who predicted weaker growth and rising bond yields. Ironically, another person near the bottom -- David Rosenberg at Merrill Lynch & Co. -- had the best forecast for Treasurys. He said bond yields would drop to 3.8%. But Mr. Rosenberg, one of the more bearish economists on Wall Street, missed the boat by predicting weak growth and much tamer inflation.