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EXPERT SPOTLIGHTJeffrey Rosen, Ph.D.Chief Economist
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Prior to joining Briefing.com in 2009, Jeffrey spent two years at AEGON where he
provided long-term economic forecasts and analyzed current economic problems
for the investment division. He was an adjunct professor at Ohio Wesleyan University teaching econometrics and obtained a Ph.D. in Agricultural, Environmental, and Development Economics from Ohio State University. Jeffrey has developed a large-scale macroeconomic forecasting model that allows him to analyze current economic trends and determine their future impacts on the economy. His analyses can be found on the Economic Calendar in addition to the Economic Insight, Economic Data Previews, and Economic Data Reviews columns. He also provides commentary on Live In Play. Get the inside scoop on Jeffrey Rosen. This expert spotlight features: • Q&A • Jeffrey Featured in the Media |
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Q & AQ: You've developed a proprietary large-scale macroeconomic forecasting model. How do you use that to analyze economic trends? |
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A:
Our proprietary macroeconomic model follows typical economic fundamentals and coordinates the movement of over 100 different economic variables. In the near-term, the model uses the high frequency monthly economic data and estimates current quarter GDP growth. In the long-run, the model picks up less volatile trends and provides an estimable path for where the economy is headed. We use the model to understand how the economy is performing in today and to gauge the long-term effects of potential exogenous shocks. | |||
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Q: When will the economy accelerate beyond the “New Normal” growth pattern? | |||
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A:
The U.S. economy has been growing well below potential ever since the recession ended in 2009. Unfortunately, our model does not show a drastic acceleration in GDP over the next year or two. The end of the financial crisis caused a massive deleveraging effort across every sector of the economy: consumer, business, and government. There was no “buyer of last resort” left to drive the economy forward. As such, we’ve seen spurts of growth, but nothing sustainable or large enough to provide the economy with enough momentum to get out of the current rut. We’ve entered a period that former Treasury Secretary Larry Summers aptly named “Secular Stagnation.” In essence, any near-term period of growth is the result of the building of an asset bubble –stocks or housing - or some type of stimulus measure. During these periods, there may be some relatively short-term growth but nothing sustainable. Growth will likely continue at a roughly 2.0%. Any growth well beyond that pace will likely be driven by trends that are unsustainable in the long-run. | |||
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Q: What does the sizable drop in the unemployment rate say about the economy? | |||
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A:
Since the end of the recession, the recovery in the unemployment rate has been driven primarily by a drastic decline in the labor force participation rate. Demographics have played a key role in the decline. Aging baby boomers have naturally dropped out of the labor force, which has lowered the participation rate. Normal demographic shifts are not a problem, but that is not the only reason for the drop in the labor force participation rate. The recovery has been very uneven for middle income employment. Many of these potential employees have become discouraged and have left the labor force. The exact size of the discouraged population is debatable, yet it is undeniably large. The BLS estimates the unemployment rate would be nearly 1.5 percentage points higher if discouraged workers were included in the calculation. Until these workers return to the labor force, the unemployment rate will not be a true indicator of the health of the employment sector. | |||
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Q: How sustainable are the current home price gains? | |||
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A:
Most housing price measures have shown a solid recovery, which has led to concerns that the housing market has entered another bubble-like period. We don’t necessarily believe the market is due to crash like it did in 2005, but we are also unsure if the housing price gains will be lasting. The increase in prices, along with higher mortgage rates and stagnant income growth, has caused a big decline in overall housing affordability conditions. It is unlikely that mortgage rates will decline in the short run given the expectations of a forward-moving economy. That leaves income growth or declining prices as the main catalyst for better affordability. We believe a drop in prices is more likely to occur than an acceleration in income growth. There is too much slack in the labor sector, and employers – in the aggregate – have more power to keep income growth at a minimum. | |||
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Jeffrey Featured in the MediaEvery Wednesday – KDOW 1220 AM – Catch Jeff every Wednesday at 11:30 AM ET on the Rob Black Show to talk economic news and insight.Questions for Jeff or Rob? Call the studio at (800) 791-5463. Not in the Bay Area? Listen live online. November 12 - The Rob Black & Your Money Show – KDOW 1220 AM - Jeff talks holiday sales, wage growth, job numbers, payroll gap, Euro-zone and interest rates.. Listen to the interview now. November 10 - Bankrate.com - Jeff discusses the upcoming holiday shopping season and October retail sales. "He says he's "confident that sales rebounded into positive territory in October. Last month, sales were partially depressed from weaker auto sales." Read the full article now. October 29 - Investors.com - The Fed has a tough task if inflation stays at the 1.7% level where it's hovered for about a year, said Jeff. "You're missing on the target and claiming it's improving when all the data sources claim the opposite." Read the full article now. Read the full article now. October 29 - The Rob Black & Your Money Show – KDOW 1220 AM - Jeff talks turning off QE, 10 year treasury, earnings season, GDP and more. Listen to the interview now. October 27 - Bankrate.com - "A portion of the softness is a result of a natural reduction in inventory growth following the outsized gain in the first quarter," Jeff says, adding that construction of single-family and multifamily housing will put a damper on the GDP update. Read the full article now. October 1 - The Rob Black & Your Money Show – KDOW 1220 AM - Jeff commented on car sales numbers, consumer confidence, and the housing bubble. Listen to the podcast now. September 24 – The Rob Black & Your Money Show – KDOW 1220 AM – Jeff talks real estate market conditions, job growth, and more. Listen to the podcast now. September 10 - The Rob Black & Your Money Show – KDOW 1220 AM - talks Euro zone, auto industry, employment report and more. Listen to the podcast now. September 5 - Bankrate.com - The Labor Department's August jobs report presented an all-too-familiar pothole in an often frustratingly slow recovery. The economy added 142,000 jobs in August, interrupting a streak of six straight months of job gains of 200,000 or more. But it may well be a case of a quick swerve, rather than a crash. Jeff said he supports the "swerve" theory. "I’m leaning toward it being a one-month aberration," he said. Read the article now. September 3- The Rob Black & Your Money Show – KDOW 1220 AM - Jeff talks the labor market, interest rates, inflation and more. Listen to the podcast now. August 20 - The Rob Black & Your Money Show – KDOW 1220 AM - Jeff talks Janet Yellen, interest rates, and payroll growth. Listen to the podcast now. August 14 - Investors.com - Jeff rovided insight on retail sales and whether it signals doubt about an economic recovery. "The surprise is the consumer is still wanting to save and they're not showing more resiliency," says Jeff. Read the full article now. August 13 - The Rob Black & Your Money Show – KDOW 1220 AM - Jeff talks weak retail sales, ugly jobs market, FOMC effectiveness, and more. Listen to the podcast now. August 12 - Marketwatch.com - Jeff won the Marketwatch top forecaster award for July. "Capital spending — one of the missing pieces of the anemic recovery — is finally clicking into place." Read the full article now. | |||
