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Housing bubble hero

Christopher Thornberg was among the few economists who predicted the housing crash. It helped bring a wealth of clients to his firm, Beacon Economics.

April 26, 2013|By Ricardo Lopez, Los Angeles Times
  • Chris Thornberg's housing analysis accuracy has attracted clients to his firm, Beacon Economics.
Chris Thornberg's housing analysis accuracy has attracted clients… (Beacon Economics )

The gig: Christopher Thornberg is founding partner of Beacon Economics, a Los Angeles-based economics consulting firm. Since its founding in 2007, Beacon has provided economic analysis and forecasting for cities, counties and corporate clients.

He also worked as chief economic advisor to the state Controller's Office from 2008 to 2012.

While he was at the UCLA Anderson Forecast, he began sounding the alarm about an impending housing market crash — and the ensuing recession. He eventually left UCLA after disagreements, he said. When his prediction panned out, his credibility led to lots of work for the newly started Beacon.

Middle-class beginnings: Thornberg, 45, grew up in the suburbs of Rochester, N.Y. His father owned a real estate company. When he was a teenager, his mother became a travel agent.

He studied business administration at SUNY Buffalo. "In hindsight, it probably was a 'lazy' degree," he said. But "at the time, I was interested in getting out of school and exploring the world." He graduated a half-year early and spent two years traveling in Europe, the Middle East and Africa.

Choosing to be an economist: When he returned, he enrolled in an MBA program "mainly to mollify my parents, who were convinced I was going to become a hippie and never have a real job," he recalled.

His marketing professor at the University of Rochester had encouraged him to apply to graduate school at UCLA. He moved to Los Angeles in 1991.

Culture shock: Thornberg arrived in L.A. during some of the worst civil unrest the region had seen. It "was not exactly the best time in the history of L.A.," he said. The city was "mired in a terrible downturn.... There were floods, fires and riots. It was a mess.... I find it humorous that my initial impressions were so dismal. Yet today, I love L.A."

Southern detour: Once he earned his doctorate at UCLA, he left for South Carolina and spent three years teaching economics at Clemson University. He enjoyed teaching, but he said he became disillusioned by academia and its disconnect with real-world applications.

He was lured back to the Southland by his dissertation advisor, Edward Leamer, a well-known UCLA economist. He joined the UCLA Anderson Forecast in 2001, initially writing economic forecasts on Los Angeles. Eventually, he moved on to writing about the California economy.

Sounding the alarm: In 2006, Thornberg began warning of an impending housing crash, but other economists diverged from that view, arguing that any downturn would be a "soft landing."

"I think history has shown where I ended up on that equation," he said.

He eventually left UCLA Anderson Forecast and went on to start Beacon Economics with San Francisco economist Jon D. Haveman, who was formerly with the Public Policy Institute of California. Haveman has since left Beacon.

Leamer said Thornberg did good work for the forecast but had an entrepreneurial spirit that did not fit in the bureaucratic confinements of the university.

With downturn, a glut of work: "The fact I was right on the economy instantaneously created a lot of business for us," Thornberg said. "I ended up with a book of business that [led to] us hiring two more people. We couldn't handle all the work on our own."

The Great Recession, with its chaos and economic uncertainty, brought more clients to the nascent firm. As municipal budgets crumbled, cities including Torrance contracted with Beacon to conduct analyses and forecasts.

Beacon economists are widely quoted by financial journalists on real estate markets and regional economies.

Maturing a business: Thornberg eventually brought on Sherif Hanna as managing partner. Hanna had worked at the UCLA Anderson Forecast as managing director. "Over the last two to three years … he has professionalized Beacon." The firm now employs 14 people.

Getting personal: Thornberg lives in Bel-Air, where he bought a run-down house. "To call it a 'fixer-upper' would be the understatement of the century. It was about three months from falling over," he jokes. "It's been a labor of love." He enjoys traveling and gardening, planting cactus and other succulents in his backyard.

ricardo.lopez@latimes.com

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