Morris Cohen was right.
That may not seem so extraordinary in most settings, but Cohen is an economist, and that isn't the kind of garland being thrown at most of his colleagues in the Dismal Science these days.
Last year, Cohen, chief economist for the New York firm of Schroder, Naess & Thomas, was virtually the only major forecaster to predict the economy would not fall into a recession in 1979 despite inflation and rising interest rates.
Waiting for the recession, he sniffed, would be like "waiting for Godot."
This year, despite widespread predictions of a downturn, even from the Carter administration, Cohen is out on the limb once more, asserting the recession will not come and the economy will continue at last year's pace.
Moreover, there's still a chance he could be right again. Revised figures last week showed the economy grew at a moderate 2.1 percent annual rate last quarter, rather than the sluggish 1.4 percent estimated previously.
And statistics for the current quarter show the economy has begun 1980 with surprising strength. Although most economists still hew to predictions of a mild recession, a few already are backing away from any forecast of a slump.
What put Cohen at the head of the class last year was that, unlike most other forecasters, he essentially threw away the economic history books and relied mostly on his eyes and ears to tell him what was happening.
Historically, the economy has slumped into a recession when inflation and interest rates have gotten too high. Consumers and businesses become wary of soaring costs, and retrench, figuring they will wait out the storm.
But this time, there was a dramatic change in the way Americans responded to inflation: Instead of cutting back as usual, they merely continued their spending spree in hopes of beating out the next round of price hikes.
Consumers kept pace by dipping into their savings, loading up on installment debt, refinancing their houses (to take advantage of the equity that inflation helped build) and, in some cases, sending their spouses to work.
At the same time, businesses went out and borrowed heavily to finance new inventory and equipment purhcases. The high interest rates seemed not to matter anymore. It was cheaper now to borrow than to risk higher prices later on.
The result: Instead of falling into a recession, the economy grew by a moderate 2.3 percent after adjustment for inflation.
Most other economists either missed the change entirely or didn't catch it until the very end. But Cohen had it spotted as early as November 1978: Rather than a downturn, he predicted a "real" growth rate of 3 percent for 1979.
In Cohen's view, where other forecasters erred was to mistake the effects of early-1979 bad weather and gasoline lines as signs of a downturn. But these developments were only temporary.When they subsided, the economy rebounded.
Cohen also believes other analysts relied too much on historical precedent -- particularly in their use of complex econometric computer models that most of the big economic forecasting firms employ.
And he says too many forecasters still exaggerate the impact of sharp increases in interest rates in a high-inflation economy. To be sure, there's a shock at first, he says. But after a while, people start to adjust.
As a result, in late 1978, while most models predicted a crunch was likely to result from a new round of credit-tightening, Cohen concluded the housing industry was shielded by other factors and the shock would never come.
The problem with the computer models, Cohen says, is that they're programmed to forecast mechanically, almost solely on the basis of how the economy has reacted in previous years, and can't cope with changes in behavior.
"But we're in a period where there are no parallels," Cohen aserts, "and the models don't allow for judgment on individual components." As a result, he says, the model-users are "prisioners" of their own computers.
Cohen himself does his own computations by hand (with the aid of a calculator) and then reviews them, component by component, to reflect his personal judgment about how each sector will be influenced by special factors.
Not predicting a recession for 1979 wasn't the only against-the-pack prognostication Cohen has proffered that ultimately proved to be correct:
He also forecast the sudden general price explosion that rocked the nation And the world) in 1973 -- and the stock market slump that accompained it.
He correctly dismissed up-and-down fears early last year that the nation actually had entered a serious downslide (it turned out to be no more than bad weather) and then, a month later, that the economy was overheating.
He also accurately pooh-poohed fears last autumn that the Fed's dramatic Oct. 6 credit-tightening action would plunge the economy into a recession, as many of his colleagues had asserted.
And he foresaw last month's abrupt slump in the bond market.
Where Cohen has strayed (along with most other economists) is on his forecast for inflation, most recently for 1979 and possibly, he concedes, for 1980 as well -- a mistake that could have serious implications for the future.
In late 1978, Cohen forecast a 7 percent inflation rate for the following year, using the broad gross national product price index. But the figure for 1979 turned out to be 9 percent.
Cohen acknowledges readily that the gaffe was serious. "I didn't really comprehend in my own mind how big an effect the increase in crude-oil prices would have," he explains.
This year, Cohen is forecasting a 2 percent real growth rate for 1980 -- in contrat to the one percent decline predicted by most other economists -- with an inflation rate (on the GNP price index) of 9 percent, the same as in 1979.
But Cohen again is worried about his inflation forecast, particularly in the face of the proposed fiscal 1981 rise in defense spending, Mideast turmoil and the latest consumer price index surge.
With these elements considered, Cohen says, the economy is much more vulnerable than it's been in previous years, and inflation is more likely to make a serious impact on consumer and business decision-making.
"If inflation accelerates much more sharply," it won't affect the growth rate for 1980 very much, but "you open yourslef up to another 1974" style recession in 1981, he says.
A resident of suburban Teaneck, N.J. Cohen, now 60, is a gentle but no-nonsense sort of man with an insatiable fascination with Washington policy-making and an after-hours taste for music.
Cohen earned his Ph.D. in economics at Harvard in a class that, ironically, included Otto Eckstein -- now one of the leading computer-model forecasters and Paul A. Volcker chairman of the Fed. who is raising interest rates.
Aware that forecasting often is a fickle art, Cohen isn't flaunting his success at not having predicted a recession last year, but he's plainly enjoying the role as "The Economist Who Was Right in 1979." Now, about 1980 . . .