The President’s Pen is a weekly blog written by Jonathan Smith, New Vision’s President and CEO about local economic development projects and initiatives. It also covers economic trends, workforce issues, business climate policies, and manufacturing news.
Last week I attended Enterprise Seattle’s (our King County relative) 40th annual economic forecast event. At the morning session, three economists shared their outlooks for 2012. Their sentiments about the year ahead differed somewhat which is hardly surprising given the challenges of predicting an end to our persistently gloomy economy. The good news was that none of them were predicting that our economy would get worse.
Dick Conway, with Conway Pederson Economics, focused his comments on the Puget Sound and Washington state economies. Conway cited several indicators to show that the Western Washington economy was picking up steam. Retail sales accelerated over the last quarter of 2011, personal income is on the rise, and unemployment rates are dropping. Conway suggested that Boeing’s continued hiring, strong exports, and a significant pay raise at Microsoft combined to boost the Puget Sound economy. On a broader scale he told the audience that these trends plus an uptick in manufacturing are also helping the state economy rebound. Looking forward Conway opined that housing prices and sales would rebound this year. He also suggested that retail sales would notch higher given the stronger Western Washington economy.
Michael Dueker, chief economist with Russell Investments, felt the national economy would improve albeit modestly. Dueker forecast that US Gross Domestic Product (GDP) would rise 2.5 percent this year. He also felt that inflation would be benign and the stock market would rise modestly. Dueker said that Europe may be a drag on the US economy, but he added that the biggest issue affecting our economic growth is the high incidence of household debt. While American households are getting stronger, there are still too many people that are overly leveraged in term of their income/debt ratios.
Ken Goldstein, a veteran economist with the Conference Board, saw no economic rebound on the horizon. He felt the economy has no momentum and suggested that poor retail sales over the holidays were a sign of challenging times. Goldstein added that the national economy could struggle during the first quarter this year as people pay off debt they incurred during the holidays. Goldstein felt that a modest economic recovery is still two years away. The challenge he says is that our society’s disposable income has been squeezed heavily during the recession. As a result people have less money to spend and they are being a lot more conservative in terms of how and when they spend their discretionary income.
I enjoyed the panel’s remarks and feel that our Yakima Valley economy will fall towards the middle of their projections. Our farm economy is doing well and we are seeing an uptick in local manufacturing. I predict our retail sales numbers for the 2011 holiday season will also be relatively favorable, indicating that folks in the Yakima Valley feel a bit better than most about our local economic situation. We are not a boom town though so my prediction is that we will enjoy modest growth and ride the coattails of our state and national economy. I concur with the economists cited above – a broader economic recovery is probably still a year or two away. There are too many storm clouds on the horizon to feel confident that economies will surge.
I hope my safe forecast is too gloomy. At a time when broader economies are getting a bit better I hope that we can better control our own economic destiny in the Yakima Valley. Happy new year everyone. Let’s all work towards economic improvement at home, throughout Washington state, and around the world.