Robert Z. Aliber, an author and University of Chicago professor emeritus who once worked beside economics legend Milton Friedman, says he's embarrassed.

In January, I reported his economic forecast for 2011, and, well, it was a little off.

Aliber predicted the U.S. economy would grow 4.5% to 5%, the stock market would rise 15%, unemployment would fall to the 7% range, $4 gasoline would never happen, and gold would fall to $874 an ounce.

"We will have restored our confidence in the resiliency of the American economy," Aliber declared.

I said it then and I'll say it now: I hate rosy economic forecasts. And as a columnist, I possess a powerful psychic gift called hindsight to debunk them. That's why I waited for a week when stocks were hurting and headlines were echoing rumors of a new recession to call Aliber back.

"Clearly, I'm embarrassed because my forecast for the first half of the year was excessively optimistic," Aliber conceded.

Optimism may feel good for a while, but in the end it's often bad for business. Nobody can really predict the future, anyway. So I think it's better to expect the worst and watch it not happen than the other way around.

In defense of Aliber's forecast, however, he was hardly out of sync with the times. Here are just a few other economist quotes I cribbed from news reports from January:

-- "After worries last year that the economy might be stalling, we turned a corner. I think we will have a self-sustaining economic expansion in 2011." -- Mark Zandi, chief economist, Moody's Analytics.

-- "Consumers are the most powerful cylinder the economy has, and finally it is firing." -- Sung Won Sohn, economist, California State University.

-- "The conditions are in place to get pretty good job growth this year. The payroll tax cut is in place, exports are booming, and banks are lending again." -- John Canally, economist, LPL Financial.

-- "People will finally recognize that an economic recovery is under way. This won't be a recovery seen only by economists." -- Lynn Reaser, board member, National Association for Business Economics.

So what happened? A few things economists could have never predicted: An earthquake, tsunami and nuclear crisis in Japan, the Arab Spring and ensuing spikes in petroleum, and the destructive debt-ceiling rancor in Washington, D.C., which exposed the U.S. to a potential credit downgrade and a generally bitter economic mood.

I'm afraid economists also like to note the roar of the engine without checking the fuel gauge. The Federal Reserve's QE2 bond buying has come to an end, and there's clearly a new political reality in Washington that will not tolerate further stimulus gambits. So now how are we supposed to juice the numbers?

Aliber, who released a new book this year, "Your Money and Your Life: A Lifetime Approach to Money Management," isn't giving up on his optimism. He's just reeling it back a bit.

He predicts the nation's gross domestic product will still grow between 3% and 3.5% in the second half of the year as the effects of so many unforeseeable one-time events fade.

"What has happened is a burp and we'll see some snapback," he said.

Aliber says the latest economic data paint a harsher picture than many of the anecdotes he's collected. Sales of Harley-Davidson motorcycles and million-dollar-plus yachts are up. There are now shortages of luxury automobiles. Investors are snapping up real estate renting it out for respectable returns. Airlines are full and ordering new jets. And the revenues of beleaguered state and municipal governments are coming back.

He also stands by his observation that China's housing bubble is about to pop, and when it does, we'll see a huge decline in commodity prices, including oil and gold. And as for U.S. housing woes, he expects population growth and a steep decline in new home construction will eventually result in demand catching up with supply.

Aliber foresaw the Asian Crisis of 1998, the Internet bubble of 2001 and the mortgage meltdown of 2008. It's just that sometimes, he's a bit early.

In February 2007, I watched him tell a group of University of Chicago alumni to sell everything and get into cash because the housing market was about to blow and take the stock market and the U.S. economy down with it. This prediction didn't make much sense until a year and a half later.

"I remain upbeat," he said.

But I say, enjoy the optimism while it lasts.

 

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at al.lewis@dowjones.com or tellittoal.com)