No one has taken more heat over his economic forecasts recently than Lawrence Yun of the National Association of Realtors. The NAR is perennially treated by the financial press as absurdly optimistic and not to be heeded. But a new compilation of economic forecasts puts Yun at number five among the 10 top economic forecasters in the country by USA Today.
Also included for the first time at number eight was David Seiders, chief economist for the National Association of Home Builders. While both did well in making the top 10, both appear to have been in the minority to predict a recession in 2008. That could work against their credibility as housing pundits, even if they got everything else right.
Nonetheless, this is a big deal for trade associations. The list is anonymous and is compiled by the Atlanta Federal Reserve and USA Today. The economists were given a score for each quarter of the year so that their predictions were as accurately measured as possible.
For Yun, it's like winning an academy award nomination, but not getting any work.
The Top forecaster list is usually heavily weighted with investment firm economists, but the ones that the financial press appears to trust the most for housing prognostications are the online market analysis firms. Click on any story about housing, and the go-to guys are often Mark Zandi (number eight) of Moody's Economy.com and Tim Rogers, chief economist, Briefing.com (number two in 2006.)
Maybe now, the economists who actually cover housing for a living will be featured in more stories about housing and the economy. David Berson, of PMI Group, and the former chief economist of Fannie Mae, scored first every quarter to secure the top spot. At least he has the background to understand housing.
One thing Yun has done is help create the forward-looking Pending Sales Index, which is often referenced by the financial press. This is the most comparable to the NAHB's sales index, or homes under contract.
Where the contest is this year is who turns out to be right about predicting a recession.
Berson isn't certain we're in a recession yet, but he predicted one for 2008, and for Fed borrowing rates to go as low as 1.5 percent. Yun believes Fed rates will be cut to 2.25 percent and hold. Currently, Fed rates are at 3.00 percent, but they could go as low as 2004 levels.
The FED is widely expected to cut short-term rates by 75 basis points, which would put them at Yun's target, if rates aren't lowered again for the rest of the year. If they go lower, so does his credibility with the financial press, even if others say the same thing.
Most economists don't believe that lower Fed rates will help mortgage interest rates go lower, because of continuing fears of inflation.
No, right now there are bigger fish to fry, namely saving the investment banks that got us into this mess. Too bad their economists didn't calculate the effect of bad loans on the economy and the mortgage market. The Fed has created a special lending program to include a number of investment banks, including troubled Bear Stearns to have access to 90-day loans.
Which proves as long as Wall Street, not Main Street, is the nation's primary concern, it's not likely that anyone other than pro-securities economists will be given their due by the financial press.
