Economic predictions net professor second contest win

jelavich

Dr. Mark Jelavich

While most Americans would agree that the nation is passing through uncertain economic times, predicting the onset of a recession or the approach of prosperity has always proved a risky business, even for professionals.

But according to veteran “St. Louis Post-Dispatch” business writer David Nicklaus, one of the most accurate crystal balls around belongs to Dr. Mark Jelavich, professor of accounting, economics and finance at Northwest Missouri State University.

Nicklaus recently declared Jelavich the winner of his 2007 Economic Challenge and highlighted some of the economics scholar’s predictions in a column published on Feb. 1.

To read Nicklaus’ column go to: (www.stltoday.com/stltoday/business/columnists.nsf/davidnicklaus/story/8B3471FCED9F1BA8862573E20013A7D5?OpenDocument).

The award makes Jelavich, who also received the prize in 2005, the Challenge’s first two-time winner since Nicklaus created the contest eight years ago.

For 2007, Jelavich predicted 2.8 percent growth in the gross domestic product along with an inflation rate of 3.5 percent. Actual statistics for last year showed a 2.5 percent increase in GDP and a 4.1 percent rise in the consumer price index, the biggest since 1990.

Jelavich told Nicklaus his take on inflation was linked to rising commodity prices.

“Because we live out here (in rural northwest Missouri), we hear a lot about grain prices pushing food prices through the roof,” Jelavich was quoted as saying. “We’ve seen farm prices rising at this end, which is great for farmers, but it translates down the supply chain into rising prices for consumers.”

Jelavich also predicted an unemployment rate of 5.1 percent, which was nearly spot on compared to the actual 5 percent year-end figure. He didn’t come quite so close in predicting the stock market, estimating that the Dow Jones industrial average would end 2007 at 12,500, nearly 800 points lower than its actual 13,265 finish.

“After bucking the conventional wisdom on inflation in 2007, Jelavich continues to do so in 2008,” wrote Nicklaus, adding that while the Federal Reserve “expects inflation to moderate in coming quarters,” Jelavich thinks consumer prices will rise 3 to 4 percent over the next 12 months. He also believes the economy will be in recession for most of the year.

Jelavich doesn’t use any particular model to make his predictions, Nicklaus stated, preferring just to look at the forecasts and assumptions of others to “see how much sense they make.”

Thirty-eight people from various walks of life entered this year’s competition. Nicklaus chooses the victor by calculating an error ratio for each of four basic economic predictions (percentage change in GDP, year-end unemployment rate, percentage change in the consumer price index and the closing value of the Dow Jones average) and adding them together. The smallest combined error rate wins.

Alas, possessing keen insight into the nation's economy is not necessarily the path to great wealth. For submitting this year’s top entry, Jelavich will receive a “Post-Dispatch” coffee mug, T-shirt and tote bag.

For more information, please contact:

Anthony Brown,
News Bureau Manager
E-Mail: abrown@nwmissouri.edu
Phone: 660.562.1704
Fax: 660.562.1900

Northwest Missouri State University
219 Administration Building,
800 University Drive
Maryville, MO 64468

Return to Previous Page