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*|
|Trade deficit||-$43.3 billion||-$43.1 billion|
|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 Briefing.com, 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.