After three years of tracking the California economy as director of the UCLA Business Forecasting Project, David Hensley is leaving Los Angeles for a job on Wall Street with a major regret: He did not get the chance to forecast a strong recovery from the state's current woes.
Hensley, 34, was one of California's most bearish economists during his tenure at the closely followed forecasting group. While some economists privately chafed at his projections when they came out, many came to admire his techniques and track record.
"David Hensley was a very competent short-term forecaster. There's no question about that," said Robert K. Arnold, co-founder of the Palo Alto-based Center for the Continuing Study of the California Economy.
"I doubt very much that bullishness or bearishness had anything to do with the positions he took. He based them on his reading of his model (of the economy) and his experience."
On Tuesday, while loading his belongings into a New York-bound moving van, Hensley sounded a familiar note. "As far as the eye can see, recession continues" in California, he said.
A native of Houston who earned his Ph.D in economics at UCLA in 1989, Hensley is joining the Wall Street investment firm of Salomon Bros. He is assuming a newly created job as a vice president of research in the firm's real estate research group.
The outlook from UCLA is not likely to change anytime soon. Larry Kimbell, 54, a longtime adviser to Hensley and his predecessor as director of the forecasting project, has returned to his old job as head of the group.
"Virtually every single major indicator is negative for California," Kimbell said.
Hensley's view of the forces behind California's historic recession changed in the last year.
He said he initially regarded the downturn as a product of the national slump combined with such regional factors as the slowdown in defense spending, the drop in construction and a "biblical string of natural disasters" such as earthquakes and drought.
More recently, however, Hensley said he came to recognize that the state's consumer spending--a driving force in the economy--also is being hurt badly by another factor: a long-term shift in California consumers' attitudes about the future.
Many consumers "feel poorer than they used to," he said, because of falling real estate values and declining job security. Consequently, he said, "the whole mentality in the state has changed" and "people are adjusting their expectations and spending."
As the bearer of repeatedly pessimistic forecasts, Hensley acknowledged that he often dismayed government officials and business executives. But he said he was never forced to soften his pronouncements and was not under any pressure to leave UCLA.
Even if he tended to be more pessimistic than other economists, many of his projections still turned out to be "wildly optimistic," he also said.
"We've been bearish compared to the consensus of economists but optimistic compared to reality," he said.
In fact, Hensley said one of his most embarrassing projections came in mid-1991 when he sensed that a pickup in the national economy would pull the state along. "We were just wrong," he said.
"It took a tremendous opportunity to pry me away," he said. "I love that group (the business forecasting project), and I think it's a precious institution."