Forecasting

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Economic Realities
Dr. Rajeev Dhawan Director
ECONOMIC FORECASTING CENTER
Presented at the UCSB Forecast Seminar Santa
Ynez, California June 7th, 2006
Office 404-651-3291 email forecast_at_gsu.edu http
//www.robinson.gsu.edu/efc
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Goldilocks
My Version of the Goldilocks Tale Has a Happy
Ending!
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Top 5 National Predictions
Expect a Soft Landing in 2007
1. Enjoy 2006,
2. Housing Market Displays Orderly Moderation
3. Long-Term Rates Will Rise Mildly
4. Bet on Manufacturing of the RIGHT Type!
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"President Bush spoke with the Amish it was the
only group he could find that wasn't upset about
the high price of gas." Jay Leno
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Source AJC, April 19th, 2006
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Oil Price Why We Pay as Much as We Do
Source EFC Calculations, Department of Energy,
US Energy Information Agency
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Top 5 National Predictions
Expect a Soft Landing in 2007
1. Enjoy 2006,
2. Housing Market Displays Orderly Moderation
3. Long-Term Rates Will Rise Mildly
4. Bet on Manufacturing of the RIGHT Type!
5. Oil Remains Above 60/Barrel for Next Few Years
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2005 Jet Orders
Projections based on 10-Q filings
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Source Boeing.com EFC Mapping
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Source Jim Borgman, The Atlanta Journal
Constitution, Jan 27, 2006
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Big Three Automakers vs. Toyota
Source FRB of Chicago
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Honda
Nissan
Kia Hyundai
?
Volkswagon
BMW
Source FRB of Chicago
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Dow 30 Revenue Growth is Good
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Ongoing Recovery
Tech Bust
Roaring 90s
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May 10th FOMC Press Release
The Committee judges that some further policy
firming may be needed to address inflation risks
but emphasizes that the extent and timing of any
such firming will depend importantly on the
evolution of the economic outlook as implied by
incoming information
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U.S. Short-Term Forecast
2005 2006 2007 2008
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FEDs Ben S. Bernanke
BERNANKE ON DOLLAR At the Center for Economic
Policy Studies at Princeton University
February 24th, 2006
As I have already noted, the dollar provides a
reasonably secure gauge of real economic values
only when inflation is low and stable.
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Fiscal Deficit
Trade Deficit vs.
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Anonymous Vent
With as much Chinese-made merchandise as Wal-Mart
sells, perhaps they should change their name to
Great Wall Mart.
Source AJC, January 12th, 2006
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• High Trade Deficit Numbers Keep US Long Term
  Interest Rates Low!

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Global Current Account Balances (Billions of
U.S. Dollars)
Source Remarks by Governor Ben S. Bernanke,
March 10, 2005
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Global Savings Glut Is Showing up in T-Bond
Holdings
Source FRB Flow of Funds Data
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Trade and Holding of US Treasuries by Central
Banks
Japanese Bought 220 Bil. worth of Treasuries
to Keep their Currency from Appreciating
Period from July 1st 2004 to June 30th 2005
All numbers are in billions of U.S. dollars
Source BEA (Trade) and US Treasury Department
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10-Year Bond Rate and Trade Deficit
10-Year Bond Regression
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Anonymous Vent
So the U.S. cant make decent cars, were losing
jobs to India and China, Iraq is a mess and now
we cant even beat Mexico in baseball. Man, this
is getting to be as bad as the Carter malaise
years!
Source AJC, March 22nd, 2006
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Anonymous Vent
My wife just took off with my illegal alien
gardener.
Everything will be fine, though. I just saved a
bunch of money on my car insurance by switching
to GEICO.
Source AJC, April 18th, 2006
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Special Thanks to the Centers Executive Sponsors
Carl R. Zwerner Chair of Family Owned Businesses
Morgan Keegan
Sponsors