Overview of the SRP Economic Forecast for 2011
Yesterday, I had the opportunity to attend the SRP Economic Forecast
for 2011 at the Arizona Biltmore resort in Phoenix. I
have gone every year for the last several years and the speakers are always
enlightening and quite accurate with their forecasts, even if the news is not
positive.
The Arizona perspective and forecast was headed by Dr. Stephen
Happel who is a Professor of Economics at Arizona State
University. For the national and international perspective, Don
Reynolds was back for the fourth year in a row and once again brought
up some excellent points.
Overview of Dr. Happel's Economic Forecast for Arizona for
2011
- Dr. Happel started off his talk with noting that all recessions eventually
come to an end. This was prompted by recent media reports that had just come
out declaring that recession had officially ended last year.
- The fundamentals that draw people to Arizona are still in place. Things like
the wonderful climate, the beautiful scenery and the "western" feel are all
still available.
- Some economic figures for Arizona are improving, while
others continue to decline. We may see improvements in things like job growth
and retail sales in 2011, but any growth is likely to be modest and still
behind "normal" growth rates. He likened it a to tepid forecast for Greater
Phoenix and cautioned we may still see negative numbers for things like wages
and employment into 2011.
- In response to "Where is the Arizona economy going?," the
answer is unknown. Currently, there is tremendous uncertainty out there and
until this uncertainty is resolved, companies and individuals are going to stay
more or less in a holding pattern and curtail things like spending and
growth.
- Arizona's economic recovery is dependent upon the U.S. economy improving. To
really see growth, Arizona needs more people moving here as they historically
have. However, this is hard to do when these folks are unable to see their homes
in other places in order to be able to make the move.
- Dr. Happel feels the odds of a double dip recession are about 50/50 right
now. And, even if the second dip is not "official," it may still feel like it
since unemployment is not going to be resolved quickly and the housing issues
are still in place.
Overview of Don Reynolds' Economic Forecast for 2011
- Mr. Reynolds’ started off his presentation with the fact that we are in
recovery. It is a genuine recovery, but it will be very slow. The trend is up
and the worst is over.
- The United States is struggling with a "crisis of uncertainty." Not only are
we dealing with internal issues, but global uncertainties are also playing a
part in the recovery.
- This uncertainty is causing a Catch-22 since corporations and individuals
are holding back from things like spending, growth, expansion and new business
ventures until they know what is happening. However, we need all these things to
be happening to jump start the growth our economy needs. They key is to get the
uncertainty gets resolved, otherwise the economy will continue to be pulled in
too many directions.
- Some positive global signs seem to indicate that there will not be a double
dip recession. China is seeing growth rates in the 9% range. India is poised for
7% growth and Latin America will post a strong 5.5% growth figures. In Europe,
Germany has seen 9% growth over the last few months and England is somewhere in
the 4% range. With a forecasted global economic output of 5.5% proposed for
2011, a double dip recession does not seem likely.
- Some factors that could have an impact going into 2011 - The expiration of
the Bush tax cuts, the carbon tax, sovereign debt issues,
inflation/deflation/stagflation, the new healthcare legislation, unemployment,
housing and more.
- Driving new job growth and decreasing unemployment are huge issues to focus
on. It could take 4-6 years to get us back to where we were job-wise.
- And, as alluded to before, the key to the recovery is to reduce the
uncertainty and fear that is out there.
Overall, it was an enlightening event. And, it was nice to hear some positive
news since the last few years have been eye-opening. The overall takeaways I
left with are - we need to reduce the uncertainty out there in order to give
people and companies the confidence to start spending and expanding again and
that while we are officially in recovery mode, the recovery is going to
be slow.
Link
to my overview of the 2010 SRP Economic Forecast
photo credit: j_cavera
Originally posted on Live Better in Scottsdale