Forecaster of the Month: Here’s a conservative economist who doesn’t think Trump fixed everything

The Robert H. Smith School of Business, University of Maryland

Peter Morici

Peter Morici is one of those conservative economists who doesn’t think Donald Trump has fixed everything. Although he applauds much of Trump’s agenda on taxes and deregulation, he bemoans what he calls a mismanaged trade war and sees a lot of sclerosis in the U.S. economy.

Morici, a professor emeritus at the business school at the University of Maryland and a regular columnist for MarketWatch, is the winner of the Forecaster of the Month contest for July. It’s the sixth time Morici has won the award, which we instituted in 2003 to honor those forecasters who are the most accurate.

Read Morici’s columns on MarketWatch.

“The economy will finish the year strong,”“ growing at a 3% for the second half of the year, Morici said. Next year will be more of the same. The big question is: “Was this just a temporary jolt or will it continue at a high pace?”

He’s optimistic, but not wildly so. He thinks the tax cuts for corporations will have a meaningful impact on investment, which should propel potential growth “in the neighborhood of 3% going forward.”

“It hinges not so much on the availability of capital, but on the rate of return,” he said.

On the negative side, Morici thinks the White House is mismanaging the trade war, and is favoring certain industries, such as steel. “The White House is naive about China,” he said. “We’ll have to hit China much harder.”

Trump doesn’t have a strong team of economists, but he wouldn’t take their advice anyway, Morici says. Trump is the opposite of Teddy Roosevelt, who thought American leaders should “speak softly, but carry a big stick.”

Looking at the domestic economy, Morici says three big sectors are holding us back: Health care, higher education, and the auto industry. These sectors are ripe for bipartisan solutions that would make them more efficient, he said.

Morici won the July contest by going against crowd with his 0.1% forecast for the consumer price index, and by hitting gross domestic product growth on the button. He scored high on three other indicators: the trade deficit, durable goods orders, and the consumer confidence index.

Morici’s forecast Number as reported*
ISM 58.1% 60.2%
Nonfarm payrolls 190,000 213,000
Trade deficit -$43.3 billion -$43.1 billion
Retail sales 0.6% 0.5%
Industrial production 0.5% 0.6%
Consumer price index 0.1% 0.1%
Housing starts 1.320 million 1.173 million
Durable goods orders 1.5% 1.0%
Consumer confidence index 127.2 127.4
New home sales 670,000 631,000
Gross domestic product 4.1% 4.1%
*Subject to revision

It was the sixth time Morici has won the contest. Over the past 12 months, Morici has been the eighth most accurate in our contest out of 45 forecasting teams. The runners-up in July were Joerg Angelé of Raiffeisen Bank, Jim O’Sullivan of High Frequency Economics, Lou Crandall of Wrightson ICAP, and Ian Shepherdson of Pantheon Macro.

The MarketWatch median consensus published in our Economic Calendar includes the predictions of the 15 forecasters who’ve earned the most points in our contest over the past 12 months, plus the forecast of the most recent winner of the monthly contest. When they differed, the MarketWatch consensus was more accurate than the closely followed Bloomberg consensus 65% of the time in 2017.

The top forecasters over the past year are Jim O’Sullivan of High Frequency Economics, Ryan Sweet of Moody’s Analytics, Christophe Barraud at Market Securities, Joerg Angelé of Raiffeisen Bank International, Pat O’Hare of, Michelle Girard’s team at NatWest Markets, Avery Shenfeld’s team at CIBC, Peter Morici of the University of Maryland, Brian Wesbury and Bob Stein of First Trust, Richard Moody at Regions Financial, Michelle Meyer’s team at Bank of America Merrill Lynch, Michael Feroli at J.P. Morgan Chase, Jan Hatzius’s team at Goldman Sachs, Spencer Staples of EconAlpha, and Gus Faucher at PNC Financial.

More from Peter Morici:
Be Sociable, Share!

Related Posts


MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.

This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.

The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The educational training program and software services are provided to improve financial understanding.

The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.