|
|
 |
 |
 |
 |
   |
FORECASTING: AND THE WINNER IS...
Liro was confident about domestic demand, especially in services, so he felt the overall U.S. economy would stay strong. The driving force for his 1998 interest-rate and inflation outlook, he says, was a trip to Asia in October, 1997. ''People in the States were too sanguine about the impact of Asia on the U.S.,'' Liro says. ''During the trip, I saw how bad things were.'' The global crisis, he reasoned, would hold down goods prices, even while domestic demand grew strongly. And mild inflation meant that interest rates would stay low. Looking at 1999, Liro, 50, sees some storm clouds ahead. Real gross domestic product will grow by 2.1%, he predicts, with most of the slowdown early in the year. ''We're going to see a period in the first half when consumers will retrench,'' Liro says. At the same time, he projects business investment and housing will slow, while foreign trade will remain a drag on growth. As for any kind of profits growth in 1999, Liro's answer is pretty blunt: ''No way in hell.'' As for the much publicized Y2K problem, Liro is worried--but not specifically about computers. He fears that financial institutions may pull back from lending in late 1999 because they will be unsure how borrowers will weather millennial computer glitches. In his mind, ''Businesses will only want to deal with people they are reasonably sure are compliant [on Y2K].'' As a result, he foresees a ''mini-credit crunch.'' Liro's professional background is all economics. The New Jersey native started out as a research assistant at the Federal Reserve in Washington. And after earning a doctorate in economics at Syracuse University, Liro worked at the New York State Financial Control Board, and S.G. Warburg & Co. He lives in Summit, N.J., with his wife, Joanne Hill, a derivatives analyst for Goldman, Sachs & Co. Liro joined Stone & McCarthy at the invitation of his longtime friend and company founder, Raymond W. Stone. The firm specializes in economic and investment forecasting. If Liro's economic forecasting remains as savvy as it was this year, Stone & McCarthy's best call in 1998 may well have been offering him a job.
By Kathleen Madigan in New York RELATED ITEMS
|
Economists have all kinds of computer models and logarithms. But sometimes a forecast depends on personal observations. Such was the case for Joseph R. Liro, the most accurate forecaster for 1998. Liro, who was chief economist for CIBC Oppenheimer Corp. until he joined the Princeton (N.J.)-based economic consulting firm of Stone & McCarthy Research Associates in March, turned in the most correct forecast: He predicted strong economic growth in the U.S. would be paired this year with no rise in interest rates.
Updated Dec. 17, 1998 by bwwebmaster
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
Terms of Use