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Winter 2001
DOLLARS AND SENSE
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The offices of the Forecast occupy a quiet corner of Leon and Toby Gold Hall in UCLA's Anderson School. The cramped quarters feel somewhat isolated from the rest of the school's busy surroundings, and if one didn't know better it would be easy to assume that there wasn't much going on here. But looks are deceiving. Using the combination of professional expertise and the latest computer-based econometric models, the tiny staff of five churns out four major forecasts a year, reports that help illuminate the underpinnings of the local, state, national and global economies. It is the oldest major forecasting group in the West and is included in the Blue Chip Economic Indicators survey, one of the top consensus forecasts in the country.

Which is not to say that the Forecast's predications are uniformly embraced. When it predicted recession in 2001, for example, "we were accused of being pessimistic because we called the recession early," Leamer says.

Then came the terrorist attacks of September 11.

After the assaults on New York and Washington, D.C., other economists who didn't before see a recession in the offing suddenly were saying that the recession was here, and it was being caused by the terrorists. The Anderson forecasters, however, were not so quick to rush to that judgment. "Our response was to say, 'Let's be more thoughtful here and think about whether this was really going to be a recession-causing event,' "

Leamer says. "My view was that [those predicting recession in the wake of the attacks] were giving the terrorists way too much credit." Leamer's view is shared by Washington Post economics writer Steven Pearlstein. "I noted last year, when I was thinking that the economy was in much worse shape than other people thought, that Ed had been issuing some warnings," Pearlstein says. "So I called him up and was impressed with the way he thought about the economy. Because he thinks about it differently."

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