Are you a little skeptical when an economist or a financial strategist appears in the MSM, warning for the worst?
A look back at the Dec. 25, 2006, “Where to Invest” issue of BusinessWeek gave us a measuring stick to see how frequently cited “experts” shaped up in 2007 – including New York Times regular Ian Shepherdson, Moody’s Economy.com economist Mark Zandi and Standard & Poor’s Chief Investment Strategist Sam Stovall.
BusinessWeek surveyed 80 investment strategists about where the stock market would be at the end of 2007, and 58 economists on where gross domestic product (GDP) would be at the end of 2007.
The “consensus” of the BusinessWeek survey was fairly close to target – predicting the Dow to be at 13,155, the S&P 500 to be at 1,501 and the NASDAQ at 2,647. Although no one foresaw the midsummer Dow high of 14,000 on July 19 or the year’s high of 14,164 on October 9, the year-ending slide put the markets closer to the experts’ predictions.
Standard & Poor’s Chief Investment Strategist Sam Stovall, who has appeared on ABC “World News with Charles Gibson” five times and once on “CBS Evening News” in 2007, predicted a Dow finish at 13,180. In August, Stovall had a gloomy forecast – forecasting a recession after the Dow dropped 3 percent.
Although fourth-quarter GDP numbers for 2007 won’t be released until March, none of the economists surveyed by BusinessWeek came close to predicting the erratic GDP growth numbers of 2007 – 0.6 percent in the first quarter, 3.8 percent in the second quarter and 4.9 percent in the third quarter (3.1-percent average for the first three quarters).
Ian Shepherdson, chief
Network news regular and Moody’s Economy.com economist Mark Zandi predicted GDP at 2.5 percent in the first quarter, 2.9 percent in the second quarter and 3 percent in the third quarter (an average of 2.8 percent) – a prediction just slightly lower than what happened. Zandi appeared on CBS 20 times, NBC seven times and ABC five times in 2007. Zandi has been pessimistically outspoken on the housing market – predicting the end to the housing downturn might not happen until June 2009.