MarketWatch: Top forecasters see severe recession

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FORECASTER OF THE MONTH
Top forecasters see severe recession
Harris, O'Sullivan win fifth championship in MarketWatch contest

By Rex Nutting, MarketWatch


WASHINGTON (MarketWatch) -- Award-winning economist Jim O'Sullivan of UBS takes no solace in the accuracy of his long-standing forecast that the housing bubble would severely impact the U.S. economy.

"It is what it is, whether we forecast it or not," O'Sullivan said. "It's a painful time on Wall Street."

O'Sullivan and his boss, Maury Harris, won their fifth Forecaster of the Month award from MarketWatch in September, beating 44 of their peers in the monthly contest that honors those who've done the best job of forecasting the tricky monthly numbers that most move financial markets.

Harris and O'Sullivan think the U.S. economy will be weaker for the next five or six months before a gradual recovery in the second half of the year behind further significant actions by the Federal Reserve to unfreeze the credit markets and stimulate growth again.

They expect the Fed to lower its target interest rate to 1% (from 1.5% currently) and provide even more support to financial firms and credit markets through special lending and liquidity operations.
The Fed "will do what has to be done" to maintain a functioning financial system, O'Sullivan said. There's "an awful lot more they can do," he said, adding "They do get it." ......(more)

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