Or Should We Make Good Use of Our Assets & Ignore the Pundits?
At a recent economic forecast presented by the Deschutes Economic Alliance the audience heard from several ‘experts’ on how the economy will look over the coming year.
Of the four speakers only one seemed to have a rather gloomy outlook on Central Oregon’s prospects. In fact, Dr. Bill Watkins with Cal Lutheran University Center for Economic Research and Forecasting fully admits that he’s not always a popular guy in our region, because, in his view, he delivers the news the way it is and doesn’t pussyfoot around it. We can look at Watkins’ assessments and predictions from one of two points of view: he’s delivering the facts and we may not like them but we’ll just have to live with them OR he doesn’t have a clue what he’s talking about and should stay in California.
We’re going to take Dr. Watkins to task for a several reasons and question some of his rationale:
First, he got it wrong when he claimed that the Oregon population is not experiencing in-migration. Watkins said that a look at the data suggested the state’s domestic migration rate as negative, or at least flat. But this outlook is contradicted by a recent On Numbers analysis compiled by the Oregon Business Journal, which offered that Oregon should have 3.9 million people, up about 73,000 from the 3.83 million people who lived here in April 2010, when the last official count was taken. This would make it the country’s 27th most-populace state.
Second, he suggested that Bend is done and compared it to a mining town. “But what you were actually mining was babyboomers’ wealth, which took a big hit and is not coming back any time soon. The community needs to accept that, and come up with new models to stimulate economic vigour that utilize the assets you have and build on new initiatives.” Acceptance is not a Central Oregon additive! As Kelly Walker remarks in this issue: Our capricious economy (and climate for that matter) has a way of naturally selecting the hardiest of souls. Those of us who love the High Desert enough to weather the storms and stay long term don’t know the meaning of quit. We never think we’re beaten, so we never are.
Third, Watkins takes credit for economic development and job creation when things like Facebook and unmanned vehicle testing were largely spearheaded by the Economic Development of Central Oregon organization. We are not aware of anything Dr. Watkins has said or done in Central Oregon that has helped to create one job.
Fourth, are you kidding? In terms of how to potentially stimulate more vigorous growth, Watkins suggested the government encourage a higher influx of immigrants with home-buying power.
And finally, the other three speakers at the recent forecast offered a much more constructive approach to our economic future and if there’s one thing we know for sure: an economic improvement has to come with a good attitude, such as:
Dr. Martin A. Regalia, senior vice president for economic and tax policy and chief economist, United States Chamber of Commerce stated we are seeing a few more signs of optimism. Forecasts recently primarily looked at downside risk, but now are relatively flat or even slightly positive. I am guardedly optimistic that we will see gradual improvement economically across the board this year and into next.
Regalia continued, “Overall, I think we will see consistent GDP growth of 2.5 to 3 percent, a gradually improving housing sector and the Euro Zone hanging on and going through a shallower recession over the next six to eight months.
However, Ragalia’s predictions are lower than Jan Hatzius, Chief Economist Global Investment Research for Goldman Sachs: For the world economy as a whole, our forecast for real GDP growth in 2012 is 3.2 percent and 4.1 percent for 2013.
Another keynote speaker at the forecast (and one we’re confident the audience came to see) was Andrew Sorkin, author of the best selling book (and movie) Too Big Too Fail. Sorkin offered that if everyone in the room had any idea how bad things could be if certain bailouts and other benchmarks had not occurred we would be a lot worse off than we are now. The resulting fallout he said would have created an economic crisis magnified by 20 to 30 times. But that’s another story.
According to Kiplinger in this month’s newsletter: The U.S. economy starts 2012 with momentum from 200,000 net new jobs added in December, above the monthly average for 2011 of 137,000. They expect job creation will average about 170,000 a month in the coming year, only a little faster than the workforce will grow. The recent infusion of capital into the European banking system eases concerns about a global financial crisis. And Congress seems to be moving toward a full-year extension of the payroll tax cut, which would remove a cloud over consumer spending.
Regalia said certain Washington policy programs could be instituted to stimulate growth, such as focused time-constrained initiatives like accelerated depreciation incentives to speed up business investment. Continued low interest rates and inventory levels should also give rise to increased demand.
From an interview in Oregon Business magazine Tom Potiowsky, a professor of economics and chair of the economics department at Portland State University noted:
In Oregon, there are several bright areas that have not only done well in recent times, but are likely to continue to remain strong in the year ahead. The state’s exports are almost back to their pre-recession level and in 2010 were up more than 18 percent over the prior year. Exports of computer processors and integrated circuits from the likes of Intel continue to top the list by far, but other exports, such as aircraft parts, scrap metal and wood, have all increased as well. That growth could taper a bit in 2012, but it should still remain strong.
All of these statements make sense and give pause for optimism, compared to Watkins delivery: On the state front, the expectation is for a weak economic growth in Oregon with continued job losses over the next two quarters and a growing gap relative to the national unemployment rate, continuing softness in home prices and relatively little new construction.
In conclusion: shall we kill the messenger or shall we take the advice of William B. Conerly Ph.D., Oregon economic consultant: a bustling Central Oregon economy will come from great business practices, not from legislation, regulation or regional campaigns?
Why didn’t they all just say that? pha