Wednesday, September 22, 2010

Analyst Who Called Recession End Sees Durable Rebound

Economist Thomas Lam accurately predicted the official end of the recession a year and a half ago, and now he is offering his opinion on economic recovery. He predicts that we will see the economy rebound, with less than a 20% chance of a renewed slump. reports:

    “The main risk to the U.S. economy today is really a prolonged period of mild growth rather than an imminent recession,” said Lam, the Singapore-based chief economist at OSK-DMG, a joint venture between Malaysian securities firm OSK Holdings Bhd. and Frankfurt-based Deutsche Bank AG.

    Lam’s May 2009 call that the U.S. would emerge from recession the following month -- confirmed this week by the National Bureau of Economic Research -- drew “quite a bit of heat because it was a time when things were still uncertain,” the 35-year-old analyst said in a telephone interview with Bloomberg News today. “Some thought the call too optimistic.”

    Lam, who published his prediction while working for his previous employer, United Overseas Bank Ltd., studied peaks in the number of U.S. jobless claims using a proprietary weighted- average formula to remove statistical “noise,” and found a correlation with economic turning points.

    “The model actually predicted it would be 394 weeks from the prior trough in November 2001” before the economy would begin growing again, Lam said. “It was actually 395 weeks.”

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