The stock market will rise, Denver’s housing market won’t crumble, oil prices will moderate, retail sales will only get hotter, interest rates and inflation will tick up only slightly, and unemployment will rise only modestly.
That’s the 2007 economic forecast from Jim Peterson.
Who the heck is Jim Peterson?
Just a guy who sells houses to working-class people in southeast Denver.
Why bother with his forecast for 2007?
Well, he was right in 2006.
Peterson, 61, has been married to a first-grade teacher named Nancy for 30 years. When he’s not selling homes as a Re/Max broker, he likes to travel the world, hike and ski. But earlier this year, he beat out scores of professional money managers and traders in an annual contest by Bloomberg News columnist John Dorfman known as the “Derby of Economic Forecasting Talent.”
Peterson predicted that by August 2006, oil would hit $72 a barrel. It went to $72.13. He said interest rates – as measured by 10-year Treasuries – would hit 4.8 percent. They went to 4.78.
The rest of his forecast – which involved calling GDP, inflation, retail sales and unemployment – wasn’t quite as astonishing. But for nailing just one variable precisely, he tied for first place with Allen Hoppe, a principal financial analyst for the Metropolitan Council in St. Paul, Minn., and Gibran Lalani, an associate at municipal-bond insurer CIFG Services Inc. in New York.
Is Peterson smart? Or lucky?
“I would not pretend to be a Jeff Thredgold (Vectra Bank Colorado economist) or a Tucker Hart Adams (U.S. Bank economist),” Peterson said. “I am a voracious reader as related to economics, politics, history and travel, and each day it is exciting to try and figure out which way the world is going to turn.”
As for me, I predict the world will continue to turn from West to East. But given my luck at forecasting, an asteroid could hit the planet and reverse its rotation.
Earlier this year, I predicted the Dow Jones industrial average would not top its then-all-time high of 11,723. The Dow closed Monday at 12,441. I panned the initial stock offer price of Niwot-based shoemaker, Crocs at $21 a share. It’s now at $42.14. I also made fun of Google’s valuation when its stock fell to $381.55. The stock has since topped $510, though it’s now $462.80.
Given my track record, I must concede my forecasting talent to Peterson.
I asked Peterson for his forecast for August 2007. Here’s what he said:
“I have a bullish feeling,” Peterson said.
The Denver native and University of Colorado graduate is also bullish about selling homes in Denver. This comes despite a record foreclosure rate, sliding home sales, a dip in the median price of a Denver metro-area home from $242,000 in November 2005 to $240,000 last month. Peterson predicts August’s median home price for metro Denver will be at $245,000, down from $252,900 in August 2006 – not enough to hurt his business.
“I find myself very busy,” said Peterson. “I sense momentum in the market.”
He says foreclosures will prove another buying opportunity for real estate investors. Peterson has been selling homes in Denver since 1973. He remembers the housing bust of the late 1980s and early 1990s that took the price of a $100,000 condominium down to $10,000.
“What we’re going through right now doesn’t even come close to that,” he said.
A CHALLENGE: Can anybody beat Peterson’s forecast? Post your predictions on my blog (denverpostbloghouse.com/lewis) for the Dow, GDP, oil, retail sales, inflation, unemployment, 10-year Treasuries and the median price of a single-family home in Denver in August. We’ll see who is smart and who is lucky.
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to Lewis at denverpostbloghouse.com/lewis, 303-954-1967 or alewis@denverpost.com.
