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Dorfman: Can you predict the economy for 2014?

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Tuesday, Feb. 25, 2014, 12:01 a.m.

Richard Welch, an accountant from Ohio, won the 2013 Derby of Economic Forecasting.


Contestants in my Derby must attempt to guess the year-end level of six economic items: the growth of the economy, the level of inflation, the interest rate on 10-year government bonds, the price of a barrel of oil, the level of U.S. retail sales in December, and the unemployment rate.

Welch, a former fund accountant with JP Morgan Chase in Columbus, Ohio, gained his victory by placing first in guessing the interest rate on 10-year bonds, and tying for first on the inflation rate.

Thirty-seven people entered the contest this year, and as usual they represented a wide variety of professions. Contestants in 2013 included financial planners and professional investors, a judge, a mayor, a plumbing inspector, a doctor, and a retired cabinet maker.

Everyone missed

I have often said that people can predict anything except the future. Virtually all contestants missed the mega-recession of 2008, the strong jump in oil prices in 2009, and the feebleness of economic growth in 2012.

When the future looks like the recent past, people usually do OK. But they miss major changes, almost always.

This year, everyone missed on the unemployment rate. It fell from 7.8 to 6.6 percent at year's end. But no one guessed as low as 6.6 percent. Thirty-five contestants figured it would be 7.0 percent or more.

The two people who came closest on the unemployment number were William Gyurko, a retired plant supervisor, and David Ogden, a retired marketer and researcher on the pharmaceutical industry. Both guessed 6.9 percent. That helped propel the two of them into a tie for second place in the contest.

The vast majority of contestants also missed the boat by overestimating inflation. In 2012 all 23 contestants guessed too high for inflation. In 2013, 33 of the 37 guessed too high.

Winners' predictions

Welch figures that “things will improve” for the economy this year, but that with the Federal Reserve “tightening a little,” interest rates will rise. He believes that consumer spending is likely to be strong because of pent-up demand from the bad years during and after the 2007-2009 recession.

Ogden of Montclair, N.J., is also in the optimistic camp. He expects that 2014 “will be in general better than 2013,” with a housing recovery leading the way. He adds that he expects economic progress to continue over the long term because of the virtues of “free markets and capitalism.”

Gyurko, who lives in Lakeland, N.J., thinks that 2014 will be “not quite as good as 2013.” Like Welch, he expects interest rates to rise. Unlike Welch, he thinks a rate increase will cause the economy to “slow down” and “plateau.”

Contest rules

Would you like to try your hand at economic forecasting? Everyone is welcome, from full-time economic professionals to rank amateurs — and both have won the contest over the years.

To enter, you must submit your answers to six questions by email to If you don't like email, you can write to John Dorfman, Thunderstorm Capital, 1 Liberty Square, fifth floor, Boston, MA 02109. Entries must be time-stamped or postmarked by midnight, March 11.

Be sure to include your name, occupation and phone number. If you win, I must be able to reach you for an interview.

Here are the six questions.

• The U.S. economy, measured by gross domestic product (GDP), grew 1.9 percent in 2013 in real (inflation-adjusted) terms. What will GDP growth be in 2014?

• Inflation, measured by the Consumer Price Index, was 1.6 percent in 2013. What will it be this year?

• The interest rate on 10-year government bonds stood at 3.03 percent as of Dec. 31, 2013. What will that rate be on Dec. 31, 2014?

• A barrel of oil cost $98.42 at year-end 2013. What will it cost at the end of 2014?

• Retailers rang up $438.8 billion in sales in December 2013. What will retail sales add up to in December 2014?

• Unemployment fell to 6.6 from 7.8 percent in 2013. Where will the unemployment rate stand at the end of this year?

You are not required to state the reasons behind your guesses, but if you wish to, I will find them interesting.

If you win the contest, you will receive a trophy. Second and third places carry no prize but glory.

John Dorfman is chairman of Thunderstorm Capital in Boston and a syndicated columnist. He can be reached at

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