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However, economists are important. Without them we wouldn’t know what to expect, well, economically. With that in mind, we offer “Economic Out-look: A Slight Downslide” on page 4, which highlights the views of several economists presented at the Construction Forecast Con-ference put on by the National Association of Home Builders (NAHB).
Of course, one of the economists there admitted, with some humor, that they’ve been predicting a downturn since 1997. Eventually, they’ll be right.
But the surprising part wasn’t that the economists were wrong again last year; they’re on a roll and looking to extend the streak. The surprising thing was the somewhat rampant, unbridled humor.
It is to laughI was at the conference and I was prepared to be bored. I brought my tape recorder so I could turn it on and nod off. But there was laughter. What the…? Did someone fall down walking to the podium?
No, there was actual humor and lightheartedness being conveyed by the speakers to the audience, instead of lulling us into lightheadedness and stupor.
I had to stay awake for this.
One economist who made me laugh was Robert Dederick of Northern Trust Co. An associate of Alan Greenspan, our esteemed Federal Reserve Chairman, Dederick’s talk was name-droppingly titled, “The Economy, Alan Greenspan, and I.”
Dederick noted that “The economy has reached a point of stress.” (This was not funny.) This stress is due to the excessively rapid growth we have experienced. Therefore, we have to raise interest rates to rein the economy in.
How high will the Federal Reserve Bank raise interest rates?
“Who the hell knows?” answered Dederick.
How about the Fed itself?
“They don’t know either,” he exclaimed.
The stock market has been suffering lately from what he called “irrational exuberance.” With this, we’ve added a huge amount of risk to the economy. So the Fed is going to slow the economy’s growth. Whether it’s too slow or not slow enough, it will be slower, he said.
During the question-and-answer session, he asked a questioner if he was an important person. Dederick said if someone’s important, he doesn’t argue with him. He says, “Hey, you’ve got a good point there.”
Compensation?When he was asked when Greenspan might be stepping down as chairman, Dederick replied that he’ll keep the job as long as he is healthy.
Being Federal Reserve Chair-man is the ultimate job to which every economist aspires. It propels you from being an average, dull economist to an important, powerful, and revered person.
Many people believe that the chairman can do anything and be anything. But, noted Dederick, Greenspan “will never be handsome.”
Joseph Hu of Standard & Poor’s also passed along several amusing anecdotes that kept the audience chuckling.
- For those wondering why homes have 2 1/2 bathrooms, Hu said it’s because the average size of a household is 2.5 people.
- He remarked that you can change your credit rating but your intelligence is something you’re stuck with for life. He then related how, when he was working with his son on a math problem and pointedly told him, “How can you be so dumb,” his son answered, “Dad, I think that has something to do with you.”
- Hu also mentioned that he was talking to someone from the U.S. Census Bureau before the conference. Since the Bureau would be releasing the official percentage of people who are homeowners some time during the conference, he offered $100 if he could get the number in advance to announce during his presentation. He was refused. Hu concluded this means that either we have integrity in government, or else $100 isn’t enough.