A WALK IN THE WOODS - University at Buffalo

alumniprofileChristopher Thornberg, BA ’89 : Economic forecaster offers a no-nonsenseapproach and a track record for calling it correctlyDURING THE MID-2000S, as home prices werejumping in much of the country and unemploymentnumbers were an afterthought, ChristopherThornberg, BA ’89, realized something wasn’t right.Home values and new-home construction trendsdidn’t match fundamental historic income levelsand population growth figures, the economistnoticed.Not many agreed with him. Today, many do.Thornberg is widely cited as one of the earliest andmost accurate predictors of the sub-prime mortgagemarket crash that began in 2007 and the globalrecession that followed.“There is an old saying in finance that the trendis your friend. Unfortunately, this is very dangerousadvice in practice. We focus on the fundamentals—andwhenthe trends don’tRIGHT ONTHE MONEYmatch the fundamentals,you canbet that somethingis reallywrong,” he says.Thornberg’s success today is due in part to theattention he has received since calling the economicdownturn. In 2007, he co-founded BeaconEconomics, a Los Angeles-based economicsresearch, consulting and forecasting firm. Its staffhas since grown from two to 15.Between 2008 and 2012, he was a chief economicadviser to the California State Controller’sOffice and chaired the state controller’s Councilof Economic Advisors—the body that advises thestate’s chief fiscal officer about emerging economicissues.He gives more than 80 speeches a year toeveryone from local and state officials to hedgefund managers to university leaders, mainly inCalifornia, but increasingly in other parts of thenation and the world. And he has become a regularmedia commentator, appearing everywhere fromNBC’s “Today” show to ABC’s “Nightline” to TheNew York Times and The Wall Street Journal. Arecent Los Angeles Times profile of him was headlined“Housing bubble hero.”Thornberg, who grew up in Rochester, N.Y.,studied business at UB with a focus on marketing.After graduating, he spent two years traveling theworld before enrolling at UCLA for graduate school.He earned his PhD in 1997 and then accepted a jobas an economics professor at Clemson University inSouth Carolina.In 2000, he faced a decision: Stay at Clemsonand climb the academic ladder or take a job offeredby his former adviser at UCLA at the university’seconomic forecasting center. He opted for UCLA.Thirteen years later, he is convinced he madethe right move.Thornberg believes the bridge economic forecastingprovides between academic work and thebusiness community better suits his personalitythan does the slower-paced, more isolated world ofuniversities.His firm’s blog is called “No NonsenseEconomics: Economic Insights Without The Hype,”a motto partly influenced by Thornberg’s don’thold-backpersonality (he doesn’t worry aboutdropping a salty word into an interview), and partlyby the firm’s commitment to its business model ofdelivering objective, accurate research as opposedto “selling” answers clients may want to hear.For Thornberg, there are two keys to economicforecasting: trends and fundamentals. Trendsmean the latest unemployment rates, home pricenumbers, etc. Fundamentals mean that you have tounderstand past economic swings and relate to currentones.Despite his accurate prediction about the recenteconomic downturn, Thornberg concedes forecastingis an inexact science.“No forecast is right,” he says. “Some forecastsare less wrong than other forecasts. I just think I’mpretty good at being less wrong than the others.”Story by Sean Nealon, BA ’01, with photo byMax S. GerberThornberg onwading througheconomic news> Pay attention to the source. Too much of what we hear is junk—people shouting opinions not facts.Look for content based on actual data and unbiased analysis.> One month is not a trend. You need to look at multiple periods to perceive a change in trend.> A lot of conventional wisdom is wrong. For example, the ideas that raising taxes hurts economicgrowth and that interest tax deductions increase homeownership, while popular with the politicians,have little support in the data.www.alumni.buffalo.edu UBTODAY Fall 2013 29