Forecast: cloudy


The Graduate School of Business kicked off its Business Forecast 2007 series with a Wednesday press conference, where the emphasis was not on numbers but on trends. The Forecast series itself is trending up: since the GSB began its economic predictions in 1954, the annual event has expanded far beyond Chicago. By the end of February, six prognosticators will have shared their best "economic insights for everyday” with alumni in 18 cities, including Brussels, Hong Kong, and London. Chicago went first, a few hours after the press conference.

Michael Mussa, AM’70, PhD’74, a senior fellow at the Peter G. Peterson Institute for International Economics in Washington, DC, offered the prediction that “U.S. economic growth will slow to just above 2 percent,” but hedged his bets: “The risks around this central forecast are significantly greater than they have been for the past four years.”

Marviz Zonis, GSB professor emeritus of business administration, focused on "five major trends [that] are driving global politics,” including “the demands of the Islamic world for greater respect.” The United States will have to meet those demands, he said, not through bombs “but with massive accommodation.” Meanwhile, Zonis said, the U.S. will continue to suffer a loss in status as other global centers (“London, Bonn, Moscow, Riyadh, Tehran, Delhi, and Beijing”) rise.

Austan Goolsbee, the GSB’s Robert P. Gwinn professor of economics, offered five predictions. Prediction No. 4? “Prepare yourself for a hedge-fund shakeout, scandal, and, perhaps, regulation.” Why? “With a downturn, it is going to become immediately obvious that some hedge funds have been grossly inflating the values of their holdings and raking in huge fees based on those values.” As managers desert the foundering ships, some funds will collapse: “And then you will see the investigations.”


Business Forecast 2007 panelists Marvin Zonis, Michael Mussa, and Austan Goolsbee predict the economic future.

Photo by Beth Rooney.

December 8, 2006