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Normally, the keynote speaker at IE Business Daily’s annual economic outlook predicts how he or she believes the economy is likely to perform during the rest of the year. Twenty twenty six is different, however. This year’s keynote speaker declined to do so.
“Forecasting the economy for the entire year, as of right now, is impossible,” Jay Prag told the audience during a business lunch event at Threshold Aviation Group at Chino Airport March 19.
Prag, an economics professor at Claremont Graduate University, spoke for about 30 minutes before joining a panel discussion that included Ryan Niesen, San Bernardino County’s economic development manager, Jeff Burum, founder of three successful real estate companies and the nonprofit National Community Renaissance (CORE), an affordable housing agency in Rancho Cucamonga, Mark DiLulllo, founder of Threshold Aviation Group, and Michael Burrows, chief executive officer of the Inland Valley Development Agency and San Bernardino International Airport.
Prag downplayed much of the gloom and doom that surrounds the U.S. economy today, but at the same time he wasn’t as optimistic as he usually is.
“I’ve been doing talks like this for the last few years, and I have a pretty good track record,” Prag said. “But I don’t think anyone can make an accurate prediction this year. My forecast for 2026 is to call me in eight weeks, because right now I don’t have a clue. My crystal ball is clouded, mostly because of the war with Iran.”
Prag cited his prediction in 2009 that the recovery from the Great Recession would be slow, not fast as most of his fellow economists predicted, as evidence of his past forecasting ability. In that instance, Prag said he used information that other economists overlooked, and some macroeconomic models that were also being ignored, to come up with his forecast, which ended up being true.
This time he can’t find a similar approach.
“When I made made that prediction I knew I was going against the mainstream, but I also knew I wasn’t guessing,” Prag said. “Right now I have thoughts, and I have guesses, about how all of this might turn out, but that’s all I have.”
Prag acknowledged that gas prices are high – approaching $6 a gallon at the time of the event – but he rejected those who are comparing the current conflict in the Middle East to the oil crisis of the 1970s.
Unlike the current crisis, the Arab oil embargo of 1973, happened because all of the oil producing nations in the Middle East stopped selling oil to the United States. Today, our conflict is with Iran only.
“During the oil embargo we had lines at gas stations because we were running out of gas,” Prag told the crowd. “There really was a gas shortage. Now we have higher prices, which is a problem, but they will stabilize.
“This is nothing like what we were dealing with in 1973.”
Much depends on whether the United States can get the Strait of Hormuz reopened. Shut down since Feb. 28, about 20 percent of the world’s oil supply passes through the 100-mile long strait, which connects the Persian Gulf, one of the world’s great sources of oil, to the Arabian Sea.
“This will be difficult to get through, and whether it gets better or worse depends on our ability to secure the oil supply chain in the Middle East,” Prag said, “Hopefully we know what we’re doing. But there’s a big difference between having a problem with all of the Arab countries and having a problem with one.”
Prag then discussed GDP growth, unemployment and inflation. While acknowledging that all three are problems that could get worse, Prag believes they aren’t as serious as some of the media is making them out to be.
“The naysayers are hyping that the fourth quarter GDP growth was revised downward, but they don’t mention that the third quarter growth was astounding,” Prag said. “And full-year growth in 2025 was a little over two percent, despite the fomenting over tariffs. There’s there’s nothing in GDP data that indicates we’re currently on a bad track.”
Prag also downplayed concerns about unemployment, saying that the current 4.4 percent unemployment rate is lower than the lowest number recorded during the eight years of the Obama Administration: 4.7 percent.
“Historically, 4.4 percent unemployment isn’t bad,” he said.
But Prag saved his strongest language for inflation. He noted that the most recent 2.5 percent consumer price index was only half a percentage point above the Federal Reserve’s ideal 2.0 percent.
“That’s not perfect, but it’s good,” Prag said. “Those of us who are old enough to remember the 1970’s and stagflation, know that we’re not close to anything like that. We’re in reasonably good shape right now.”
Following Prag’s remarks, the panel discussion moved away from the state of the economy and onto more general topics, including the need to reduce regulations and make it easier to get projects approved, the need for businesses to celebrate their successes and persevere through their mistakes, and the emergence of artificial intelligence, which its proponents say will improve efficiency, help establish strategies based on data, and make the workplace more efficient.
“I’m a big believer in AI, and I believe it’s going to change the world,” Burum said. “Every business has to understand what AI can do, what it can be adopted to, and that you can use it to do existing jobs without firing a lot of people.”
