I linked to a story about forecasters a few days ago but it’s still got me confused.
These days, housing prognostication is big business (I do a little prognosticatin’ myself). There are a few people that I watch closely and in fact, several that I fawn (is that a word?) over. But I was taken aback by the USAToday/Atlanta Fed’s rankings of the most accurate forecasters out of a pool of often quoted economists.
It was done anonomously so the analysts would not be swayed by personalities they were covering:
Atlanta Fed economist Tao Zha and Fed programmer Eric Wang analyzed the quarterly predictions to determine the most accurate forecasters. Zha and economists Robert Eisenbeis and Dan Waggoner had previously developed the methodology. Rather than assessing the accuracy of each forecast variable separately, as is commonly done, the economists used statistical methods to assess the joint accuracy of the predictions. The Atlanta Fed economists did not know the identities of those they were evaluating.
David Berson, formerly of Fannie Mae and now of PMI, has long been one of my favorites, as well as Mark Zandi of Economy.com. Nariman Behravesh of Global Insight and Ethan Harris of Lehman are on the list and I enjoy reading their work. The remainder on the list I am not familiar with.
However, several prominent economists were not ranked, and I am not sure what that implies:
David Rosenberg of Merrill Lynch, a bear, pumps out a lot of interesting work and I enjoy hearing him speak often on Bloomberg.
Robert Shiller, perhaps the most widely quoted economist out there, was not on the list. He is the author of a best selling book and co-creator of the Case Shiller Index.
Nouriel Roubini, an often quoted economist for bloggers and the media, is perhaps the most negative forecaster out there, yet he is a terrific public speaker (just make sure you are euphoric before you hear him speak).
What caught my attention was the inclusion of Lawrence Yun of NAR as the 5th most accurate forecaster. I found that shocking, actually. I am sure he is a nice person and works very hard, but he has made some of the most amazing comments about the state of the housing market each month that have nothing to do with the data that is released. Perhaps that’s the problem. It’s not the data (that was analyzed) it’s the delivery of the message.
Here’s an example.
Today, NAR’s Existing Home Sales stats were released:
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate (1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.
Lawrence Yun, NAR chief economist, said the gain is encouraging. “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said.
How can you issue a press releasing relying on the change between January to February to be a sign that the market is improving?
Sales are generally slowest in January. The change in sales from the prior February was down 23.8% and prices over the same period are down 8.2% yet the headline says the market is stabilizing?
Please tell me what the basis is for that headline in the facts that were presented or any external changes in the mortgage/credit markets and the economy? Am I missing something here?