On January 8, I attended the National Economists Club (NEC) presentation by Laurence Meyer, Vice Chairman, Macroeconomic Advisors, on “Whatever It Takes: Outlook for US Economy and Monetary Policy.”
The presentation was based on output from models developed at his forecasting company. Meyer believes that the US is in a deep recession. According to his model, moderate economic growth will resume in the second half of 2009 and accelerate in 2009. He believes macroeconomic policymakers should do whatever it takes to stimulate the economy, including a very large fiscal stimulus and continued low interest rates. He predicts unemployment will peak at 8% by mid-2009 and remain at this level for a least a year, not declining until 2011.
When asked why his 2008 forecast was so far off from the current reality, he explained that his model misread the link between falling house prices and the nation’s financial system, and the overall effect of such a financial crisis on the economy.
Find more information about this presentation and other NEC events on their web site.
— Jules Lichtenstein, Senior Economist