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Berkeley Haas welcomes nine new professors

New Berkeley Haas faculty members 2022
From top row, left to right: New Berkeley Haas assistant professors Tanya Paul, Ali Kakhbod, Carolyn Stein; Sa-Kiera Hudson, Ambar La Forgia, Sytkse Wijnsma, Sarah Moshary, Matthew Backus, and Valerie Zhang.

Nine new assistant professors have joined the Haas School of Business faculty this year, with cutting-edge research interests that range from illicit supply chains to unequal social hierarchies; from financial crises to the incentives that shape innovation; and from health care management to decentralized finance to marketing and the demand for firearms.

The nine tenure-track hires are the result of a concerted effort by Dean Ann E. Harrison and other Haas leaders to expand and diversify the faculty.

“We are thrilled to welcome this wonderful, diverse new group of academic superstars to Berkeley Haas,” says Dean Ann E. Harrison. “We clearly are bringing the best to Haas, increasing the depth and breadth of our world-renowned faculty, and reinforcing our place among the world’s best business schools.”

The new faculty members have hometowns throughout the U.S. and around the world, including Texas, New York, Massachusetts, and Illinois; Iran, the Dominican Republic, China, and the Netherlands. Seven of them are women; one is Black, and one is Latinx.

“This is our most diverse cohort of new faculty ever, each one a rock star in their own right,” says Jennifer Chatman, Associate Dean for Academic Affairs and the Paul J. Cortese Distinguished Professor of Management. “We are very proud that we were able to lure them to Berkeley Haas.”

The new faculty members start on July 1, with most beginning to teach in spring 2023. They bring the total size of the ladder faculty to 88, up from 78 in 2020-2021.

Meet the faculty

Matthew Backus
Matthew Backus

Assistant Professor Matthew Backus, Economic Analysis & Policy

Hometown: Chicago, Ill.

PhD, Economics, University of Michigan, Ann Arbor
MA, Economics, University of Toronto
BA, Economics and Philosophy, American University

Research focus: Industrial organization

Introduction: I’m an economist with broad interests. Most recently, I’m interested in how we can use the tools developed by the industrial organization community to understand inequality and the distributional effects of policy.

Teaching: Microeconomics and Antitrust Economics (MBA)

Most excited about: After spending a year visiting, I’m most excited about the economics community at Berkeley.

Fun fact: I have a border collie, who is in training as a herding dog.


Sa-Kiera Hudson
Sa-Kiera Hudson

Assistant Professor Sa-kiera (Kiera) Tiarra Jolynn Hudson, Management of Organizations 

Hometown: Albany, NY

PhD/MA, Social Psychology, Harvard University
BA, Psychology and Biology, Williams College

Research focus: I study the psychological processes involved in the formation, maintenance, and intersections of unequal social hierarchies, with a focus on empathic/spiteful emotions, stereotypes, and legitimizing myths.

Introduction: I am a social psychologist by training, focusing on the nature of intergroup relations as dominance and power hierarchies. I have studied several psychological processes, including the role of legitimizing myths in justifying unequal societal conditions, the role of group stereotypes in the experience and perception of prejudice, and the role of empathic and spiteful emotions in supporting intergroup harm. My work is multidisciplinary, incorporating quantitative as well as qualitative methods from various disciplines such as political science, sociology, and public policy.

I am a fierce advocate for building community, providing mentorship, and supporting authentic inclusion for everyone. I believe it is a moral imperative to be present as a vocal, queer-identified Black women in academe, given the lack of representation, and I’m excited to see how I can contribute to diversity, equity, and inclusion efforts at Haas.

Teaching: Core Diversity, Equity, and Inclusion (MBA)

Most excited about: I identify UC Berkeley as my intellectual birthplace. It was during a summer internship program through the psychology department in 2010 where I first became interested in studying power structures and intergroup relations simultaneously. My overall research interests haven’t changed since that fateful summer. Being a faculty member here is truly a dream come true!

Fun fact: I love organizing and planning, so much so I taught myself how to use Adobe InDesign to create my own planner. I am also an avid foodie and cannot wait to check out the Bay’s food and wine scenes.


Ali Kakhbod
Ali Kakhbod

Assistant Professor Ali Kakhbod, Finance

Hometown: Isfahan, Iran

PhD, Economics, MIT
PhD, Electrical Engineering & Computer Science (EECS), University of Michigan

Research focus: Information frictions; liquidity; market microstructure; big data; and contracts

Introduction: I am a financial economist with research interests in financial intermediation, liquidity, contracts, big (alternative) data, banking and financial crises. A common theme of my research agenda is to study various informational settings and their financial and economic implications. For example: When does securitization lead to a financial crisis? Why is there heterogeneity in the means of providing advice in corporate governance? How does information disclosure in OTC (over-the-count) markets affect market efficiency? My research has both theory and empirical components with policy implications.

Teaching: Deep Learning in Finance (MFE)

Most excited about: Berkeley Haas is the heart of what’s next with world-class faculty working on exciting and innovative research. Given that my interdisciplinary research interests span finance, economics and big data issues, I could not ask for a better fit.

Fun fact: In my free time, I like to ski, sail, hike, and enjoy the outdoors.


Ambar La Forgia
Ambar La Forgia

Assistant Professor Ambar La Forgia, Management of Organizations

Hometown: I was born in Santo Domingo, Dominican Republic, but I grew up in Washington, DC and São Paulo, Brazil.

PhD, Applied Economics and Managerial Science, The Wharton School, University of Pennsylvania
BA, Economics and Mathematics, Swarthmore College

Research focus: Health care management; mergers and acquisitions; firm performance

Introduction: My research studies the relationship between organizational and managerial strategies and performance outcomes in the health care sector. In particular, I use quantitative methods to study how the strategic decisions of corporations to merge, acquire, or partner with other organizations can change managerial processes in ways that impact both financial and clinical performance. A secondary research strand studies how health care organizations adapt their service delivery and prices following changes in state and federal legislation. 

Before joining UC Berkeley, I was an assistant professor of health policy and management at Columbia University’s Mailman School of Public Health. I am excited to continue to explore issues of healthcare quality, equity, and cost, while digging deeper into the management practices and organizational structures that could influence these outcomes.

Teaching: Leading People (EWMBA)

Most excited about: It is an honor to join the world-class faculty at Haas, and I am so excited to learn from and collaborate with my MORs colleagues on both the macro and micro side. Since my research is interdisciplinary, I also look forward to connecting with scholars in the School of Public Health.

As a self-proclaimed “city girl,”  I am excited to get out of my comfort zone and explore the natural beauty of Northern California.

Fun fact: My hobbies include yoga, urban gardening, adopting animals and stand-up comedy.


Sarah Moshary
Sarah Moshary

Assistant Professor Sarah Moshary, Marketing

Hometown: New York City, NY

Phd, Economics, MIT
AB, Economics, Harvard College

Research focus: Marketing and industrial organization

Introduction: My research interests span quantitative marketing, industrial organization, and political economy. I am currently working on projects related to paid search advertising, the pink tax (price gap in products targeted to women), and the demand for firearms. Before joining Haas, I worked at the University of Chicago Booth School of Business and at the University of Pennsylvania.

Teaching: Pricing (MBA)

Most excited about: I am excited to get to know my future colleagues!

Fun fact: My two hobbies are running and pottery—though I am more enthusiastic than talented at either 🙂


Tanya Paul
Tanya Paul

Assistant Professor Tanya Paul, Accounting

Hometown: Murphy, Texas

PhD, Accounting, The Wharton School, University of Pennsylvania
BS, Economics, Statistics and Finance, The Wharton School, University of Pennsylvania

Research focus: Standard-setting and financial reporting; the determinants and consequences of voluntary disclosures

Introduction: After getting my PhD, I spent a year at the Financial Accounting Standards Board learning about contemporary accounting issues and understanding the types of questions that standard setters are grappling with. I hope to continue working on research that is helpful to standard setters in coming up with standards that ultimately improve financial reporting.

Teaching: Corporate Financial Reporting (MBA)

Most excited about: ​​I love how interconnected the area groups are within Haas. There are so many potential learning opportunities, especially for a newly minted researcher like me.

Fun fact: In my free time, I love to read and play the piano—I had learned it as a child and am trying to relearn it now as an adult.


Carolyn Stein
Carolyn Stein

Assistant Professor Carolyn Stein, Economic Analysis & Policy

Hometown: Lexington, Mass.

PhD, Economics, MIT
AB, Applied Mathematics and Economics, Harvard College

Research focus: Economics of science, innovation, and applied microeconomics

Introduction: I study the economics of science and innovation. My research combines data and economic theory to understand the incentives that scientists face and decisions that they make, and how this in turn shapes the production of new knowledge.

One thing I love about economics is that it’s less of a narrow subject area, and more a set of tools and principles that apply to a stunningly wide array of topics. I’m excited to work with Haas students to help them understand how economic principles can improve their decision-making, both in their careers and in other areas of their lives—maybe even in ways that surprise them!

Teaching: Microeconomics (EWMBA)

Most excited about: I’m excited to be part of a large and superb applied microeconomics community—at Haas, and more broadly at Berkeley as a whole.

Fun fact: I am an avid cyclist and skier, and I was on the cycling team at MIT. Since moving to the Bay Area, I’ve loved the hills and mountains in the area. I’m working on taking my riding off road (gravel and mountain biking) and skiing off-piste (backcountry).


Sytske Wijnsma
Sytske Wijnsma

Assistant Professor Sytkse Wijnsma, Operations and IT Management

Hometown: Amsterdam, the Netherlands

PhD, Management Science and Operations, Judge Business School, University of Cambridge
MPhil, Management Science and Operations, Judge Business School, University of Cambridge
BSc & MSc, Economics and Finance, VU University, Amsterdam

Research focus: My primary research interest is designing supply chain and policy interventions that help solve real-world challenges with social and environmental impact.

Introduction: I am very excited about my projects on illicit supply chains and how they undermine social and environmental goals. The context of these projects spans a wide range of areas, from illicit waste management to illegal deforestation. I am also excited to deepen and expand ongoing research collaborations with governments and industry to investigate these issues.

Teaching: Sustainability in Business (Undergraduate)

Most excited about: Many things! Berkeley Haas, being at the forefront of sustainability, has a unique position that combines the same ideals that drive my research with opportunities for collaborative research with serious impact. The amazing colleagues and close connections to industry make it even more exciting to join this community!

Fun fact: My first and last name originate from Fryslân, a northern province in the Netherlands, where it is still tradition to name your children after family members. So although my name is quite rare in the rest of the world, in our family it crops up in every generation!


Valerie Zhang
Valerie Zhang

Assistant Professor Valerie Zhang, Accounting

Hometown: Shanghai, China

PhD, Northwestern Kellogg School of Management
MA, Economics, University of Toronto
BCom, Finance and Economics, University of Toronto

Research focus: Information dissemination; information cascades on social media; retail investor behavior; decentralized finance

Introduction: I am passionate about doing research or working on personal projects that can express my creativity. I enjoy merging disjointed ideas and working on interdisciplinary research. My dissertation combines two literatures: one in computer science on information cascades on social media, and another in finance and accounting on the effects of disseminating financial news. I am also very curious about emerging technologies that are reshaping the financial industry. Since I work on areas that are new to the research community, I sometimes feel like a lone traveler exploring completely new territories. It is terrifying but also extremely rewarding!

Teaching: Financial Accounting (Undergraduate)

Most excited about: I look forward to inspiring my students to be entrepreneurial and to come up with creative business ideas or projects.

Fun fact/hobby: I write short stories. The one I am working on has an alien and a squirrel in it.

The EU’s reluctance to impose tough sanctions on Russian energy is prolonging the war

Co-authored by  Anastassia Fedyk, Haas School of Business, UC Berkeley; Yuriy Gorodnichenko, UC Berkeley; Tania Babina, Columbia University; and Tetyana Balyuk, Emory University. Reposted from the Berkeley Blog.

Oil pump cold winter and snow. Back light, white cloudy and blue sky background, sunlight
Credit: Vladimirovic for iStock/Getty Images

The European Union (EU) countries have paid over 13 billion dollars for Russian oil, gas, and coal since Russia invaded Ukraine on February 24, 2022. Meanwhile, Ukraine is heroically defending not only its own freedom, but also the freedom of the EU and other democracies around the world. The dissonance between the sacrifices made by Ukrainians and the lack of sacrifices made by the EU countries can’t be sharper.


Source:, March 16, 2022.

Ukraine gives everything it has to battle Russia, while the rest of Europe is rather silent in one crucial respect: Russian energy. It is crystal clear that the EU has the key to force Putin to stop this war and prevent the world from sliding into the law of the jungle. With no energy revenues, the Russian economy will experience a blow that no dictator can afford.

So, why not do it now, when the time is so vital for Ukraine’s survival and for the safety of other countries? German Chancellor Olaf Scholz and other EU leaders suggest that stopping imports of Russian energy can push their economies into a recession. Prominent Western European economists disagree. Furthermore, the policy does not have to be cast in “all or nothing” terms, and the free world has a number of levers to economically destroy Putin’s war machine.

For example, EU countries use natural gas for heating and generating electricity. But electricity can come from a variety of sources, thus enabling the EU to substitute electricity generated by power plants burning gas with electricity generated elsewhere, including Europe’s existing nuclear power plants and renewable energy options such as geothermal and green hydrogen. Natural gas can also come from places other than Russia. Overall, while Europe’s current dependence on Russian oil is unsettling, the situation is not as dire as it might seem at first glance. Over nearly a decade of low energy prices, Western companies such as Chevron have focused on making substantial efficiency gains. Now that crude oil prices are hitting $115/Bbl, producers that traditionally have higher costs, such as those in the United States, are poised to expand supply.

In the short term, the EU can impose a 90% punitive tax on Russian energy as suggested by Ricardo Hausmann. He argues that because the supply of energy is inelastic, the incidence of this tax will fall on Russia. Russia’s reliance on pipelines to transport gas limits its ability to materially redirect flows of natural gas from Europe to other destinations. In addition, Russia has limited gas storage capacities and existing ones are almost full. What will Russia do if it cannot sell or store the natural gas it produces? The EU has a number of precedents of slapping punitive tariffs even on better-behaving countries. Choosing between no revenue and some revenue, Russia will have little choice. A similar point applies to oil.

If the EU can cut its consumption of Russian energy significantly—say by 80%, which does not require cutting all consumption of Russian energy and corresponds to cutting EU’s overall energy use by only 32% for gas and 24% for oil—Putin’s regime will lose cash flows that are critical for him in the current conditions. Dependence on Russian energy is not a necessary condition for Europe. Before the 1990s, the attempts by the USSR to expand energy supplies to Europe were largely resisted—with administrations from JFK to Ronald Reagan understanding the danger of potential dependence on Soviet energy—and only a small fraction of European energy imports came from Russia. Weaning Europe back off of Russian energy is possible and will be less costly to Europe than to Russia.

There is no doubt that Putin will try to sell Russian oil to other countries that are less concerned with the morals of the Russian war in Ukraine. The wide spread between Urals (a blend of Russian oil) and Brent (a benchmark blend of North Sea oil) already suggests that there are limits to such diversions, but there is more to come. A snowballing financial crisis has already put Russia on the brink of default. The Russian government threatens to nationalize foreign-owned assets of a torrent of firms exiting Russia. Russian airlines refuse to return leased aircraft. These events mean that creditors will be chasing Russian assets all over the world. Russian tankers will be arrested as soon as they enter a port of a country that recognizes international law. In a similar spirit, non-Russian tankers will be arrested when they carry Russian oil.

In addition, energy trades are often done in major currencies such as the US dollar and the euro. This makes purchases of Russian oil or gas vulnerable to financial sanctions. Indeed, banks using dollars or euros to clear transactions with Russian oil may face huge penalties. For example, Deutsche Bank was fined $258 million for helping Iran to bypass US sanctions. Russian energy will be so toxic that few financial institutions will dare to service it.

The hesitation of the EU to impose tough, meaningful sanctions on Russian energy prolongs the war. And every day of delays and bickering leads to new deaths and unspeakable suffering in Ukraine. If Ukrainians find the courage to fight in the most difficult conditions, EU leaders must find the courage to do the right thing and crush the economic ability of Russia to wage its war in Ukraine. Such courage now will only make Europe stronger in the long term.

Haas community turns unity into action in support of Ukraine

The shock and disbelief that rippled through the Haas community after Russia attacked Ukraine last week is turning into unity and action by the many students, faculty, staff, and alumni with deep connections to the region.

Fiodor Otero holding a sign at a rally for Ukraine in San Francisco City Hall.
Fiodor Otero, MBA 23, shows his support for Ukraine at a rally at San Francisco’s City Hall last Thursday.

Today, the student-led European Business Club held a “Haas for Ukraine” forum for Ukrainian and Russian students to share their perspectives on the conflict. Others are launching fundraisers, and a faculty member has begun organizing a collective of fellow Ukrainian economists to brainstorm how to help the country both short- and long-term.

“We hope we can be of help, because the feeling of helplessness watching the situation unfold from afar has been among the worst parts of the emotional rollercoaster,” said Assistant Professor Anastassia Fedyk, who was born in the Ukraine and immigrated at age 10 when her mother Tatiana Fedyk, PhD 08, began her doctoral studies accounting at Berkeley Haas.

The violence is taking a huge emotional toll. Like many Ukrainians, Fedyk’s family has been preoccupied with checking in on their close family back home, some of whom are now leaving for Romania. Dima Okrimchuk, MBA 17, calls his parents in Kyiv every few hours to make sure they are okay, anxiously waiting to hear their voices. 

“Watching live reports of my country torn apart by the Russians is just devastating,” he said in an interview from Lisbon. “This is something I will never forget.”

“We hope we can be of help, because the feeling of helplessness watching the situation unfold from afar has been among the worst parts of the emotional rollercoaster.”  -Anastassia Fedyk, assistant professor of finance

A startup disrupted

Okrimchuk said he feels some guilt for leaving family and friends in Kyiv two weeks ago, relocating to Lisbon with his wife. But he said he’s now focused on raising funds for the Ukrainian army and spreading awareness of the conflict, while he continues work on his online game startup Organization.GG. He started the company while at Haas before moving back to Kyiv, where he recently received seed funding. 

Dima Okrimchuk, MBA 17 with his startup team at Organization.GG
Dima Okrimchuk, MBA 17, (fourth from left) with his team of Organization.GG employees who left their Kyiv headquarters after the invasion.

Rhonda Shrader, executive director of the Berkeley Haas Entrepreneurship Program, worked with Okrimchuk when his company placed third in the fall 2020 LAUNCH accelerator competition at Haas. Last year, Okrimchuk served as a mentor in a class that Shrader taught online for Ukranian entrepreneurs as part of GIST Innovates Ukraine, a U.S. State Department-sponsored program. Shrader taught students the Lean Startup methodology. 

Having developed relationships with so many of the country’s entrepreneurs, Shrader says she is devastated by the Russian invasion. “I loved working with these students,” she said. “I’m in tears.”

Before deciding to leave Ukraine, Okrimchuk asked his Organization.GG team whether they planned to leave Kyiv as well. “Everyone else had their own plan on what to do,” he said. “Out of the five of us, one remained in Kyiv, and four headed for different parts of Ukraine. They took their cars or found cars and left. A lot of people were running out of gas and there were huge traffic jams.”

Okrimchuk said he’s unsure when or if he will be able to return. “I can only hope that this won’t last long and we find a diplomatic solution,” he said. “There can’t be winners in the war. At the end of the day Ukraine is not only fighting for its own independence, but for peace and stability globally. I urge everyone to put pressure on their governments to help Ukraine with financial, military and political support before it is not too late. We are fighting for you, too.”

“There can’t be winners in the war.” -Dima Okrimchuk, MBA 17

Lives left behind

Fiodor Otero wears a "Stand for Ukraine" mask
Fiodor Otero, MBA 23, shows his support at the Haas for Ukraine event Monday. (Photo: Mary O’Connell)

Fiodor Otero joined a rally for Ukraine in San Francisco’s City Hall Plaza Thursday, which left his throat sore from shouting. A Russian classmate who supports Ukraine came along with him, moved to tears by the speeches.

“It’s been a roller coaster,” said Otero, MBA 23, whose mother is Ukrainian. He has an aunt and cousin living in Donetsk in Eastern Ukraine, where conflict between Russian separatists and Ukrainian government has continued since 2014. His voice cracks as he discusses the past week of worrying about his family as the Russian forces advance. 

“For them, war has been a normal part of life for eight years,” he said. But now, on her way to the market, she’s noticing the bombing is getting closer and louder. At 68, she is now considering leaving the same apartment complex where she’s lived her entire life.

“I was talking to my cousin last night, asking what it was like for them,” said Otero, who grew up in his father’s native Panama. His aunt and 33-year-old cousin are now talking about fleeing to Panama, where his mother is living. “It’s just so hard. My aunt is saying she will be a refugee for the rest of her life. She’s going to leave their entire life behind.” 

She now talks about giving away her things before she leaves, including her fine china and her nice glasses.“My cousin said something that struck my heart: ‘We’ve been saving these nice glasses and china to celebrate the good things in life, but those good things will never come,’ he said. ‘It’s time to start drinking from these every day before we leave.’ It’s so hard for me to emotionally process that.”

Global fears

Dimitry Livdan (Photo: Jim Block)

Dmitry Livdan, a Berkeley Haas associate professor of finance, grew up in Kharkiv in Eastern Ukraine before immigrating to the U.S. at age 24. He lost his mother to COVID last year, and wasn’t able to return to say goodbye. She was the last of his close family there.

He takes a dim view of Russian President Vladimir Putin’s prospects for success​ and hopes he will fail quickly.​ “I hope this is just for show, and he gets slapped in the face in two weeks,” he said of Putin. 

With Russia’s wealthy elite losing billions already, he believes any support for Putin will erode quickly as the economic sanctions hit hard.​ ​Livdan says his big worry is that Putin’s invasion will embolden China to make a similar move. “I worry most about what this means for Taiwan,” he said.

‘The unimaginable’ has happened

Photo of Anastassia Fedyk
Anastassia Fedyk
(Photo: Copyright Noah Berger / 2019)

Fedyk, a Berkeley Haas assistant professor of finance whose research focuses on behavioral biases and in individual and group decision-making, said her reaction on Wednesday night and Thursday morning was anger, panic, and “the understanding that the unimaginable had happened, and that things will never be quite the same again. I taught on autopilot while inwardly feeling like my world was coming apart and could not say a word about the situation in class lest I start crying.”

By the end of the week, Fedyk said, her emotions shifted to a mix of “pain, hope, determination, and of course pride in my compatriots. Like the entire world, I am inspired by the resistance of the Ukrainian people—but I am worried whether the newly mobilized global support will be enough.” 

The stakes are high, she says, eight years into the conflict that has been simmering since Russia annexed Crimea in 2014. If Ukraine falls, “Putin would very likely not stop there, and there is a security risk to other parts of Europe; by contrast, if Ukraine succeeds in pushing off the aggression, it might have positive spillovers in Belarus and perhaps even in Russia.” 

As an economist, she believes that “letting Putin win would effectively plunge Ukraine into the economic dark ages together with Russia. And if we succeed in fighting off the invasion, there will still be much work to do on reconstruction, but at least there will be something to reconstruct, and we will have global support.”

That’s why she is organizing with other Ukrainian economists at U.S. schools to brainstorm solutions both for the immediate term and in the months and years to come. At the same time, she is glued to the news alongside her parents and her grandmother, who has been visiting from Ukraine since September. She is also trying to parent her three-year-old son, who refers to Putin as “the bad guy,” and talks about throwing him into a prickly cactus bush.

“We have been trying to teach him to use his words rather than fighting, but it’s very hard when we are watching this unfold,” she said. 

Economic forecast: Inflation could hit 9% before easing as interest rates rise

A shopper reaches above empty shelves at a Target store in Queens, NY.
A shopper reaches over empty shelves at a Target store in Queens, NY, in January 2022. Inflation hit a 40-year high this month. (Photo by Anthony Behar/Sipa USA)(Sipa via AP Images)

Don’t be surprised if inflation, which hit a 40-year high of 7.5% in January, spikes even higher over the next few months as the U.S. government’s massive response to the coronavirus pandemic continues to ripple through the economy.

Inflation will likely ease in the second half of the year, but a drop to pre-pandemic levels is not in sight yet, according to a pair of economists who shared their outlook for 2022 and beyond at a virtual conference hosted by the Fisher Center for Real Estate and Urban Economics at UC Berkeley’s Haas School of Business this week.

“We way overdid it” with monetary and economic stimulus, said Kenneth Rosen, chair of the Fisher Center and a Berkeley Haas professor emeritus. He gave Congress credit for crafting emergency programs—such as enhanced unemployment, stimulus payments and Paycheck Protection Program loans—in 2020, but “I do think the stimulus in 2021 probably was unnecessary and should have been more targeted.”

Once the economy began to reopen, those stimulus programs quickly boosted demand for goods, while manufacturing, transportation and labor-force disruptions constrained supplies. The upshot: Inflation hit 7% in December and 7.5% in January, the highest since February 1982. Rosen said the “slow-moving” Federal Reserve waited too long to curb skyrocketing inflation by raising interest rates.

Inflation could hit 9%

That will change this year, when the Fed finally starts raising rates and fiscal stimulus begins to wear off, said Rosen and co-panelist Richard Barkham, global chief economist with CBRE.

Rosen sees inflation hitting 8% to 9% in a few months, before falling to 4 to 5% by year end. Chief executives he has spoken with recently said they are raising prices. They have labor problems and “don’t think it’s going to end quickly.”

Co-panelist Richard Barkham, global chief economist with CBRE, thinks inflation will peak at 9% in the first half of the year and drop to 3% to 4% by year end as kinks in the supply chain ease up and the reopening of schools and day care facilities let more people re-enter the workforce. But inflation will be “higher and more messy than people currently expect.”

Both economists expect the Fed will raise the short-term federal funds rate, now at 0.25%, by a quarter point four or five times this year. Barkham sees two more hikes next year, Rosen sees four.

Inflation will fall, but not to target rate

The two experts also agreed that after the transitory effects of the pandemic wear off, inflation will fall—but not to the Fed’s 2% target rate because the aging population and immigration constraints will keep an upward pressure on wages. A shift away from fossil fuels along with super-tight labor markets could also keep energy prices a bit higher, Barkham said.

Rosen said the U.S. economy will likely grow 3.5% to 4% this year as international tourism, conventions, and other sectors reopen. Also, individuals and businesses still have about half of the $5 trillion in fiscal stimulus doled out since 2020 sitting idle. Much of that will be spent this year and next, Rosen and Barkham agreed.

Immigration constraints will curb growth

Longer term, neither economist sees growth exceeding 2% annually unless the government bolsters immigration.

“Immigration and inter-regional migration was always the secret weapon of the U.S. economy,” said Barkham, who is a British citizen working in Boston. But legal and illegal immigration have fallen drastically in recent years, due to policies enacted during the Trump administration and Covid-related travel restrictions.

The United States should promote immigration, “but also be more aware of the actual and perceived distributional effects on income groups that have done poorly in the era of globalization,” Barkham said, noting that it’s tricky to put into practice. “I’m not particularly optimistic that we will see that increase in immigration” in the near and medium term. That means economic growth will have to come almost entirely from productivity gains, he said.

Rosen called immigration “the number one thing we can do” to promote long-term economic growth.

As for the stock and bond markets, expect more gyrations. Rising interest rates “will cause indigestion in the financial markets,” Rosen said.

More pain in 2023

Barkham said the real pain may not hit until 2023. Even if you had six rate hikes in 2022, “you still end the year with negative real interest rates,” which means short-term rates will be lower than the inflation rate. Real rates drive the economy and real estate markets, he said, and while they won’t be as deeply negative as they are now, “they will still support higher asset values.”

But by 2023, real interest rates will turn positive, and recent history has shown the U.S. is not very tolerant of them. When rates rose in 2018, there were “two big stock market hiccups,” Barkham said. “The Fed doesn’t want a major correction, but a certain amount of chop is all part of the process of moving out of these emergency policy settings.”