IBS Professor Catherine Mann moderated the discussion, which was sponsored by the Rosenberg Institute of Global Finance and focused on how the teams at IHS Global Insight and State Street produce their economic analysis and forecasts.
Geoffrey Somes, Vice President and Senior Economist at State Street Global Advisors.
Somes shared his forecast that the economy is rising from the trough of the recession but that conditions may not feel like a recovery for some time. “It’s a bold statement,” Somes said, but unlike the recession of the 1980’s, “it is going to be different this time.” He believes the recovery will be lackluster as consumers are in no shape to spend, having lost an unprecedented amount of wealth (over $12 trillion). He advised caution, adding, “It is still early, we have much work to do and much pain yet to absorb.” While risks appear to be more balanced now, Somes felt that the global economy remains “vulnerable to further shocks”.
Sara Johnson, Managing Director of Global Macroeconomics for IHS Global Insight.
Johnson is responsible for assessing financial opportunities and risks at IHS Global Insight, and also believes that the recession is ending with a recovery slow to develop. With robust U.S. consumer demand missing from the global economy, Johnson predicted, “Asia will lead the expansion, Europe will lag.” Her prospects for the domestic economy: “Our forecast for the U.S. is a turnaround in the third quarter.”
Bruce Magid, Dean of Brandeis International Business School.
IBS Dean Bruce Magid asked the two panelists for their probability estimates for an economy that could emerge potentially better or worse than their current forecasts. Both economists remained loyal to their data, citing that it is always better to underestimate than overestimate. Somes responded, “Now we get the sense that things have stabilized. We are more comfortable saying the risks are far more balanced than they have been.” Johnson continued the point, “Right now I think both Geoff and I have got forecasts that are probably a little below the consensus.” Both seem to agree that it is a conservative outlook, but a relatively positive place to be.