A forecast to believe in?

The UCLA Anderson Forecast group headed by Ed Leamer sez NO RECESSION.

People this is Ed Freakin' Leamer. This is Mr. "Lets take the Con out of Econometrics", Mr. Extreme Bounds Analysis. This is not some third rate analyst at a bank or a political hack or a creepy blogger broadcasting from their mom's basement. He's for realz, so you gotta take it pretty seriously.

They are predicting one negative quarter (-.4% in the second quarter of 08) with the growth rate up to 2.5% by the end of the year.

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In staking out the contrarian position, Leamer noted that UCLA bucked other forecasters in 2001 by correctly predicting that year's recession.

"We got it right, and we stood alone back then," he said. In jest, he added later that he had "submitted my resignation letter, in the event I am wrong."

Whether truly in recession or not, Leamer said the economy would be sputtering. It remains so fragile that "if there is a quick halt to consumer spending, we will for sure have a recession in 2008," he added.

"The question is whether [2008] will be disappointing or horrible; our forecast is disappointing," he said in an interview.

The Anderson forecasters contend that the economy has been wounded mainly by the collapse of residential real estate. The number of jobs overall will continue to increase, but not at a pace fast enough to employ the growing numbers of people seeking work.

National unemployment will peak at 5.6% at the beginning of 2009, according to the forecast, from 4.8% currently.