NAR's Baghdad Bob Admits He Was Wrong

From Newsweek:

Former housing industry economist who famously said there was no housing bubble now admits he was wrong

David Lereah, the National Association of Realtors’ former chief economist who famously denied that the housing bubble existed even as it started to pop, is finally admitting that he was wrong.

Lereah, whose book “Why the Real Estate Boom Will not Bust and How You Can Profit From it” was published in February 2006 just before the bubble went bust, suggests in a new Money Magazine interview that his rosy outlook might have had something to do with his position as top spokesman for the Realtors. Lereah, now a private real estate consultant, says he’s bearish about the housing market and has been for a year and a half.

“I worked for an association promoting housing, and it was my job to represent their interests,” Lereah said. “If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it.”

The damage Lereah caused, of course, was serious, especially for the many home buyers who bought the hype. Lereah said he now expects only a modest recovery in sales activity this year.
“I was wrong,” Lereah told Money. “I have to take responsibility for that.”

UPDATE:

I just spoke with the Realtors’ current chief economist Lawrence Yun, who has also been criticized on blogs such as the “Lawrence Yun Watch” for his overly optimistic predictions.

Yun, who worked as a number cruncher for the industry group during Lereah’s tenure, said he “disassociates” himself from the way his former boss did things and is careful not to let his role as lobbyist for the group influence his work as the group’s chief economist.

“I don’t see my job as somehow spin,” Yun said. “I share the housing data and say ‘What does it mean and what it may imply about the future.’”

If people want to discount his predictions, they can, Yun said. And he doesn’t think Lereah’s admission hurts the credibility of the National Association of Realtors, though “it might hurt his [Lereah’s] credibility,” Yun said.


My take:

One of my professors (who worked in litigation) always said it was best to always tell the truth, because then you won't have to keep all your lies straight.

There is a fine line between being an economist and being an industry advocate. Often I am "requested" to alter some of the language in the reports or to give it a spin. I am more fortunate than most researchers, since my guys give me a lot of leeway and trust my numbers. Thus I can print headlines like "Worst Year Ever" as long as I can back it up.

As I talked about in an earlier post, the numbers are not the key anymore. It is the interpretation. And if you are an industry advocate, people more or less look at your work with a sense of skepticism, which is what they should do because you are lying to them because you have an agenda.

It is in balancing out the lies you are told and putting together a picture of what is really going on. Which is what I try to do.