August 27, 2002
UCLA Anderson Forecast is Among the Most Accurate for its National and California Predictions
Los Angeles — The latest release of the National Income and Products Accounts issued by the Bureau of Economic Analysis (BEA) reveals once again that UCLA Anderson Forecast garners an unparalleled record of accuracy for its quarterly outlook on the nation. The Forecast’s California report shares that vindication for its pessimistic, yet accurate, projections of the state’s employment growth in 2001.
The BEA preliminary data for 2002 support UCLA Anderson Forecast’s recent projection that the U.S. economy in 2002 would merely “stagger forward,” and also highlights that the 2001 downturn was well underway before the Sept. 11 attacks, confirming the Forecast’s stand that the terrorist attacks would not contribute materially to the 2001 recession.
The BEA is an agency of the Department of Commerce and one of the world’s leading statistical organizations. The BEA’s economic statistics provide an up-to-date picture of the U.S. economy and include decisions affecting monetary policy, tax and budget projections and business investment plans and estimates of gross domestic product (GDP).
Dr. Edward Leamer, director of UCLA Anderson Forecast and author of the quarterly national report, said his earlier December 2001 prediction that U.S. economic growth will be weak this coming year was echoed in the latest BEA release on July 31, 2002.
In December of 2001, Dr. Leamer said that the nation’s recovery would be “not long, not deep, but not much of a recovery either,” accurately pegging this year’s slow economic climb.
Dr. Tom Lieser, senior economist of UCLA Anderson Forecast and author of the quarterly California report, is also among the nation’s most precise forecasters. His prediction of nonfarm employment growth for California in 2001 tops the Western Blue Chip Economic list as most accurate.
Predictions that Fall Below the Consensus
Known for pessimistic predictions that often fall below the consensus, Dr. Leamer also points out that UCLA Anderson Forecast correctly outlined why the Sept. 11 attacks would not amplify the recession that was already ongoing, while most other analysts who missed the recession prediction are now claiming that the terrorist attacks are the primary catalyst for the economic dip the nation is experiencing.
“The latest GDP release has a negative for both the first and second quarters of 2001, which makes it clear that we were well ensconced in a recession prior to the terrorist attacks,” Dr. Leamer said.
This isn’t the first time that Dr. Leamer and UCLA Anderson Forecast have bull’s-eyed the economic growth of the nation, or lack thereof. In his December 2000 quarterly report, “Back to Bankruptcies and Back to Cycles,” he indicated an impending recession in 2001 and said that the Bay Area would be harder hit while Southern California would be little affected by the downturn.
In this report, Leamer emphasized that there was a 60 percent chance of a short and shallow recession in 2001 and in March of 2001 he raised that probability to 90 percent (long before it was officially announced), making UCLA Anderson Forecast the first major group to accurately predict the 2001 downturn.
Although Leamer envisions that 2002 will continue to be a sluggish period for the nation, he is taking a more optimistic view for 2003 and says that the economy will be on the road to recovery.
“We continue to be alert to the problems caused by unsustainable appreciation of houses, inadequate savings and an overvalued dollar,” Leamer said. “Currently, however, we don’t see any signs that there will be another dip and more likely we will return to normal growth in 2003.”
The next UCLA Anderson Forecast Conference will be held on Wednesday, September 25, 2002, at the Westin Bonaventure Hotel in downtown Los Angeles. The conference titled “California Infrastructure: Are We Ready to Grow?” will be presented in conjunction with the Los Angeles Area Chamber of Commerce and will examine the critical issues facing California infrastructure. As typical, UCLA Anderson Forecast economists will also provide their quarterly reports on the nation and California.
UCLA Anderson Forecast is the most widely-followed and often-cited forecast for the state of California, and was unique in predicting the seriousness of the early-1990s downturn in California, and the strength of the economy's rebound since 1993. December 2000 marked the Forecast’s first recession call since 1991.