Economist Mike Mussa: Sunny Side Up
Things aren?t as terrible as they seem, says economist Mike Mussa, who predicts a far stronger global recovery than most prognosticators.
The one-time chief economist of the International Monetary Fund who now facility at the Peterson Institute for International Economics will unveil his projections later today — as usual two weeks yet to be of the IMF, which drives his former employer nuts — and he expects the world economy to expand 4.5% this year and 4.6% in 2011.
Mr. Mussa can argue GDP components and currency misalignments with the best of macroeconomist. But his argument basically comes down to one golden rule — ?Deep recessions are usually followed by steep recoveries is a very broad historical regularity,? he says, according to his prepared remarks. Really that’s the ?Zarnowitz rule,? he says, named after economist Victor Zarnowitz, an expert on the business cycle, who died last year at age 89.
By the vital insight of what-goes-down-should-go-up, he expects the U.S. to grow 4% this year and 4.1% in 2011; perpetually inactive Japan to grow 2.7% in 2010 followed by 3% next year; and the suffering euro zone to expand 2% this year and 2.7% next year. All those predictions are more optimistic than the conventional wisdom.
He also expects very rapid progression in China — 10% in 2010 and 9% in 2011 — but so do a lot of forecasters.
Mostly, though, Mr. Mussa is a contrarian. ?The V-shaped recovery [which he] forecast a year ago at the depths of the fantastic global recession of 2008-2009 is now visibly under way,? he plans to say.