Some people come to know the world through travel. Others explore its history. Dana Peterson MS’02 sees the world through its global markets and the financial trends that shape and shake them. She started her career as a research assistant with the Federal Reserve Board before joining Citigroup, one of the world’s largest investment banks, as part of a research team that focused on North American economies. Now, as chief economist at The Conference Board, a century-old think tank that provides financial forecasting to Fortune 500 C-suite executives, Peterson’s work analyzes economic trends around the world. In a recent episode of The UW Now Livestream, she offered insight on the “short and shallow” recession that she believes will inevitably result from the Federal Reserve’s attempts at curbing inflation.
The global economy is a broad realm of research. In what areas do you specialize?
Things that I’m very focused on include inflation, labor markets, fiscal and monetary policy, trade, [and] also sentiment, including consumer sentiment, CEO sentiment, and just the sentiments of the C-suite in general. [The Conference Board] produces a lot of proprietary data, and also we do quite a bit of forecasting for 77 economies, not only in the short run, but over the next 10 years, and that 10-year outlook causes us to think really big in terms of what are going to be some really structural changes in the global economy and which countries [they’re] going to affect — things like labor shortages or deglobalization or the energy transition.
How did your work change when you shifted your focus from domestic to global economies?
If you’re a Canadian or a U.S. economist, you only focus on that country, and so you get into all the nitty-gritty and the details about those countries. If you’re a global economist, you don’t do deep dives into countries. You’re looking at themes — things that spread across many different economies — so it’s a little bit of a different focus also in terms of who cares about what you’re doing and what you’re talking about. So my clients then were institutional investors and salespeople and traders. They cared about day-to-day activities with data and how it affected financial markets. That’s why I did deep dives into the U.S. or into Canada and related that back to things that mattered for financial markets. With the global economics, since that was thematic, that really appealed more to our corporate clients, who have a longer perspective and who are making investments that last five, 10, 20 years.
What inspired this change after 15 years analyzing U.S. and Canadian economies?
When the U.S. implemented the Tax Cuts and Jobs Act in 2017, I spent a lot of time talking about the implications of tax reform on the economy, and I only really focused on the U.S. because that’s what I did. Then I took a trip to Latin America, and they were asking me questions about it. I was like, “Why do you even care?” They were like, “Well, because it matters for us, too.” That was a wake-up call [that] the world is bigger than just the U.S. It’s very interesting to think about how what happens in one country can affect people in another country. Big examples in the last two years include the pandemic. It started in China and then it moved around the world and affected everyone. The war in Ukraine, a lot of people think, “Well, that’s on the other side of the planet. How does it affect me?” Well, it’s caused food and energy prices to be really high in the U.S. Everybody eats, [and] almost everybody uses gas or some mode of transportation. Even the banking crisis may seem like a U.S. problem, but it’s also impacting other countries around the world. To me, that’s really interesting, seeing how different events can spread and have a global impact and help better explain the world.
Interest rates and inflation are on an alarming rise. What can we expect to see as the Federal Reserve attempts to address this?
My thought is that the [Federal Reserve] would like to arrest inflation without causing a recession, but I don’t think that’s going to happen. I think that if you raise interest rates by five percentage points within the course of a year, something has to break. We saw a little bit of breakage with the banking crisis, and the economy’s going to slow, and it’s probably going to slow so much that you get into a recession. But the thing is that usually when you have a recession, the labor market also suffers, so people lose their jobs. Lots of people lose their jobs. I think this time around, you can have a recession, meaning there’s negative spending or there’s a reduction in spending and investment and all that sort of stuff, but millions of people won’t lose their jobs. That’s the best of both worlds, where you slow the economy down to bring down inflation, but you don’t have lots of people looking for jobs and being homeless and that sort of thing. That’s the story that I think is most likely to happen.
What resources would you recommend to folks who are not experts in this field but want to learn more about these topics?
The Wall Street Journal is a great place to start. First of all, they have short articles. They explain what’s going on, and there are lots of pictures. I like pictures. They express a lot without any words. That’s one place to go. If you have a recreational interest in economics, certainly you can read the Economist. It’s pretty broad, but often it does talk about some of the big issues in economics. You can also look at The Conference Board’s research. We have plenty of free research on recessions and what’s going on in the economy that you can look at and get a better understanding of what’s happening.