Harry Truman, who’s reputed to have demanded a “one-handed economist” because all the economists he encountered said “on the other hand,” would have loved Jim O’Sullivan. The chief U.S. economist at High Frequency Economics not only takes definitive positions on the economic outlook, but is also often right.
MarketWatch has named O’Sullivan Forecaster of the Year every year for the past five and eight of the last 12 years. Reuters has called him the top U.S. economic forecaster for the past two years in a row. And Institutional Investor accorded him first-place ranking in its survey of U.S. fixed income investors three times.
These are impressive accolades given the volatility of the U.S. economy and the global economy during those years and good reason for financial advisors to follow O’Sullivan’s outlooks and analyses.
“The economy is critical to people’s lives and interacts with markets in an exciting way,” said O’Sullivan.
O’Sullivan likens economic forecasting to fantasy baseball: digging through economic data to develop an accurate economic forecast, much like a fantasy team owner analyzing players’ stats in order to create the strongest fantasy team.
Economic forecasting is also “like reading a map,” said O’Sullivan. “The first question to ask is, ‘Where are you on that map?’ That’s the starting path.”
Sullivan himself started his economics career at J.P. Morgan in 1985, eventually moving to UBS as senior U.S. economist, then MF Global as chief economist and finally to High Frequency Economics, known as HFE, in 2012. He was also editor and lead author of “Data Decoder: An Investor’s Guide to the U.S. Economy,” a guidebook for tracking the U.S. economy published in 2002.
O’Sullivan continuously analyzes the steady flow of economic data. “In the end, they are the key drivers of the markets day-to-day and week-to-week. They ultimately set the tone.”
O’Sullivan said he looks “at everything,” but his No. 1 indicator is jobless claims. “They’re almost infallible in setting the tone for the economy broadly […]. There are not many false signals.”
That’s not necessarily the case with the monthly employment data that the financial markets fixate on. Those reports can move “off-trend” for a time, creating false signals and extrapolations about the economy, said O’Sullivan,