Award-Winning Remarks

Editor’s note: Carl Tannenbaum and the Northern Trust Economics Team were recently honored with the Lawrence Klein Award for forecasting. The recognition, co-sponsored by the Blue Chip Economic Consensus, goes each year to the panelist who produced the most accurate projections over the past four years.

Carl was invited to offer some thoughts at the award ceremony on October 11. An abridged and augmented version of those remarks follows.

When I was notified that Northern Trust would be recognized with this year’s Lawrence Klein award, I laughed with surprise. We work hard at the forecasting process, but there are many others who are far better at it than we are. I have to suspect that the strange patterns produced by the pandemic leveled the playing field a bit. Or as my son generously observed: even a stopped clock is right twice a day.

When I related the news to my wife, she also laughed with surprise. My predictions in other arenas…such as when Sunday dinner will be on the table…are fraught with inaccuracy. But whether at home or at work, I have learned that if you keep at it long enough, you may occasionally hit the mark.

Northern Trust’s forecasting process is hardly a one-man show. I am very grateful to my teammates in the Economics Department, Ryan Boyle and Vaibhav Tandon, whose insights are essential to our effort. The two of them certainly deserve no small share of the recognition that has come our way.

More broadly, we benefit from interactions with a broad range of partners at Northern. Their views on economics and markets have an important influence on our thinking; it is a real treat to work within a community that places a high value on the collective intelligence.

That tone comes from the top. I am indebted to Rick Waddell and Mike O’Grady, the Chairmen at Northern that I have been privileged to serve. They’ve created a context that is conducive to our success. I also inherited a tradition of economic excellence from my immediate predecessors, the late Bob Dederick and Paul Kasriel (a Klein award winner himself), who set a high bar at Northern Trust that we work hard to clear every day.

As you’ve gathered from my introductory passages, I don’t consider myself an overly accurate forecaster, Klein Award notwithstanding. Because of that, I’ve often focused on out of consensus scenarios, the study of which can be very illuminating. The results feed naturally into risk management, which has been a focal point for my career, and for the careers of many economists.

So rather than working through an overview of our forecast for 2022, I thought I would use my prepared remarks to highlight some of the themes that we are tracking that could push us away from a central tendency. Resolutions on each of these fronts will have a critical impact on results.