Economic Insights - February 2011

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As Business Briefings subscribers know, we’ve often made derisive comments about the “panic du jour” crowd, some of whom earned a new measure of respect when they happened to correctly predict the 2008 financial crisis and its immediate fallout.  So, how have these “prophets of doom” been doing since the bust?  Not too well!

Consider Meredith Whitney, the once-obscure banking analyst who warned of the impending financial crisis, while most experts remained complacent.  According to Bloomberg, over the past two years, she has made correct calls on only 37 percent of the 81 companies on the S&P 500 Financials Index.

More notably, New York University economist Nouriel Roubini established a reputation as an expert by forecasting the Great Recession.  But, in 2008, “Dr. Doom” also predicted a major hedge fund meltdown that never materialized.  Then, he called for oil prices to stay below $40 a barrel, just before they spiked to $80 at the end of 2009.  In March 2009, Roubini called for the S&P 500 to fall below 600; instead, it gained 23.5 percent to close the year at 1,115.

Similarly, Gluskin Scheff’s chief economist David Rosenberg was early to sound the alarm on the financial crisis.  But since then, Rosenberg’s forecasts have been far too bearish about the recovery and he continues to predict more economic turmoil.

Or consider Peter Schiff of Europacific.  His fame grew after predicting the crisis.  But Schiff hasn’t been nearly as accurate about the recovery.  Today, he argues that the economy is in worse shape than in 2008 and on the verge of a new depression.

Looking ahead, are these “doomsayers” ready for a big comeback?  That’s clearly not what the editors of Business Briefings are seeing in the numbers. 


DailyFinance, January 18, 2011, “Most Prophets Who Called the Meltdown Haven’t Scored Well Since,” by Vishesh Kumar.  © 2011 AOL Inc.  All rights reserved.

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For instance, the Conference Board’s Consumer Confidence Index climbed to 60.6 in January, up from 53.3 in ...

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