A panel of economic luminaries took the stage in Chicago this afternoon to join in a tradition repeated this time of the year in cities across the country, opining on the outlook for the coming year.
Raghuram Rajan, a finance professor at University of Chicago’s Booth School of Business, began with a joke involving 973 sheep and a dog, the butt of which was the intellectual capacity of economic forecasters. He went on to predict slow world growth ahead, highlighting the geopolitical risks from conflict in the Middle East and Asia, and the limits of fiscal and monetary policy to turn things around.
Carl Tannenbaum, Northern Trust’s chief economist, focused on the still-troubled housing market and risks posed by the failure of European political leaders to resolve their financial crisis (he observed that Americans frustrated by the deadlock in Washington over resolving the U.S. fiscal cliff have only to look across the Atlantic for comfort that things, certainly, could be worse).
Randall Kroszner, a Booth School economics professor who was a member of the Federal Reserve Board of Governors at the height of the financial crisis, forecast U.S. economic growth next year at 2 percent to 2.5 percent, better than this year but not fast enough to do much to bring down too-high unemployment.
Thankfully, not all was apocalypse and doom. “My outlook for the next year may be bleak, but it’s not as bleak as the Mayans,” quipped Kroszner, who then checked his watch to give the audience the exact time – 16 hours, 14 days, and 21 minutes – until the Mayan calendar predicts the end of the world.