Economic Forecasting 101

Economists may seem a breed apart -- after all, they talk in econometrics, macros and micros, and when they say "Laffer curve" they're not referring to any jokes. So it may come as a surprise that one of America's top economists, Stuart Hoffman, recognized as the second-most accurate economic and interest rate forecaster by USA Today, speaks economics in an illustrative way that everyone can understand.

Hoffman is the Senior Vice President and Chief Economist of PNC Financial Services Group. Over the past year he has been giving presentations that he admits at times felt like "group therapy and economic prayer readings," to groups around the country. He spoke recently at a League of Women Voters of Greater Pittsburgh sponsored event. His main points about the economy bought back 90’s cultural phenomena and children's classics: the race car video game Cruisin’, the hit movie Jurassic Park and youngster's favorites the Lion King and Peter Pan.

For example, Hoffman addressed one of the country’s chief anxieties -- that the world cannot avoid plummeting back into a deep recession. He disagreed, asserting that the projection of the recovery will be in a “U” shape, and not a “W” (no pun intended). However, he did acknowledge that, “the road to recovery has speed bumps and potholes... [and that he would rather] go half-speed over those to recovery, than go full speed into a recession”.

In his view, the recovery is not going to be as fast and ferocious as the recession, “[this is a…] raptor of a recovery even though we had a T-Rex recession," he said. He ended by sharing that, “nine months ago was the most frightening of my career” but now “the extreme downbeat attitude of nine months ago is no longer warranted”. He was quick to note that this did not suggest a "Peter Pan economy where if we think nice thoughts we can fly”. But all in all, his final prognosis was for a "cautiously optimistic forecast, and that “slow and steady will continue to describe the region for the foreseeable future”.

Unfortunately, he noted that this slow and steady recovery isn't great news for job seekers. Many folks today are thinking about when they will be able to secure a living–wage job again. Hoffman broke the grim news that, “Unfortunately, job markets tend to be the caboose of the economic train.”