Todd Tomalak, principal of building products advisory at Zonda, was recently awarded three certificates by the Federal Reserve Bank of Chicago for his accurate forecasts on oil price, inflation, and trade-weighted dollar.

Combined with his former forecasting wins from the Economic Outlook Symposium, Tomalak is now a 14-time winner, furthering his reputation as one of the most thoughtful and diligent forecasters in the industry.

To hear more about what was in the forecasts, how they are prepared, and what’s ahead in the new year, BUILDER reached out to Tomalak for additional insight. See his responses below.

BUILDER: If you had to describe your award-winning forecasts in a few sentences, what would it say?

Tomalak: I had forecast that inflation would run much hotter than consensus, along with rapid appreciation of the U.S. dollar as the Fed tightened—to fight inflation—amid a shortage of dollars. I was fortunate to call the timing right, which was that inflation would start to slow in the second half of 2022.

BUILDER: What goes into preparing a detailed forecast that gets the recognition of the Federal Reserve?

Tomalak: The Fed grades the forecasts based on quarterly accuracy, which means to win forecasters have to be correct on both the "call" and quarterly timing of when the market will start to shift. Realistically, that means equal portions of careful thought, bottom-up analysis, and a fortunate roll of the dice, especially on timing of moves by quarter. Prices are notoriously difficult to forecast, so to get the prices right for inflation, oil prices, and U.S. dollar is like winning the triple crown. I would love to get all those right again in 2023, but that is as much skill as random fortune, so no guarantees.

BUILDER: What’s in store for building products in 2023?

Tomalak: Expect a bumpy and exciting ride, with large differences between product segments. Do you remember that scene in "Indiana Jones" when Indy is fleeing the large stone ball? The ball looks like it will certainly crush him, until the last minute when he dives away and miraculously survives. Building products may feel similar in 2023.

The housing data will look quite daunting, but most building product companies will end up with 7% to 9% better revenues than the headline housing numbers would ordinarily suggest. I also see costs being more sticky than most expect, in part because labor costs are so stubborn in 2023, and there are real productivity headwinds. Destocking will cause a lot of quarterly volatility in orders. In the longer run, building product companies have some great fundamental tailwinds, but a bumpy and exciting ride in 2023.