Spokane7
50°
November 17, 2010 in Business
Local recovery slow going
Jobs, income see modest gains
The economic recovery will grind slowly forward next year, extending this year’s modest improvements but not breaking out strongly enough to significantly affect unemployment and household income, economists John Mitchell and Grant Forsyth said Tuesday.
Speaking at a Greater Spokane Incorporated forecast breakfast, Mitchell said businesses are delaying investment decisions because of uncertainty regarding future tax policy, health care reform and environmental regulation.
Paralysis on Capitol Hill has put the levers of economic stimulus in the hands of the Federal Reserve, which is keeping interest rates low and expanding the money supply in an effort to fuel more investment and consumer demand, he said.
Meanwhile, Mitchell said, consumers are repairing personal balance sheets by backing off on the use of credit.
Household wealth has plunged by $11 trillion since peaking in 2007, and housing prices, the foundation for much of that wealth, will continue to erode in 2011, he predicted.
“This isn’t over,” said Mitchell, an independent consultant and former chief economist for US Bank.
Significant improvement awaits resolution of tax issues, implementation of some sort of hiring incentive, a reset of priorities by states facing deficits, and addressing entitlements, he said.
The fundamental question, Mitchell said, is “What are we leaving our grandkids?”
Eastern Washington University professor Grant Forsyth said successful efforts to balance budgets have included tax increases, but relied more heavily on spending reductions, including cuts in entitlements.
Austerity, if it comes, will have a disproportionate effect on rural counties that depend more than cities on government jobs and transfer payments like Social Security and Medicare, he said.
Some areas outside Spokane and Kootenai counties are already losing population, he said, and that trend will accelerate if residents drawing unemployment have to uproot their families as those benefits run out.
Forsyth said he expects some job growth in Spokane and Kootenai counties next year, but unemployment will remain above 8 percent.
Per capita income may increase slightly, but home prices will continue to fall by around 4 percent, he said, adding that public projects are propping up commercial construction activity.
Forsyth said the economy needs a 12- to 24-month period without a new crisis – European debt woes, for example – to find its footing.
Although the Federal Reserve’s decision to further ease credit and expand the money supply has been controversial, he said, “I think the Fed needed to send a signal this recovery is not going very well.”
Caldwell: West Point trained local bankers to survive 
liarsinnews on November 17 at 7:38 a.m.
Maybe Bert Caldwell should report what our elected officials predicted about our sales tax revenue to pay for the convention center expansion. The fat cats that were behind the project guaranteed the taxpayers they had nothing to worry about paying for it. Yeah, the liars hoodwinked the citizens as usual and counted on the short term memory. Attention span of the Spokane voters, at best is 2 or 3 days.
bdr on November 17 at 8:58 a.m.
Of course recovery is slow going, Since greedy market makers expanded the market by 30 to 1 leverage that like creating 29 dollars from 1. AIG and Goldman ,and Sterns pretty much superheated the economy in a few short years that took housing prices to the stratosphere in 3 short years.
Housing was the last manufacturing market that cant be outsourced. Autos ,toasters and TVs all left us years ago.
The Federal reserve is going to have to come up with a IQ session of how to keep this market from falling into another depression.
Americans need money….to keep the markets moving
but If outsourcing and automation removed Americans as consumers this is where the Fed is going to have to intervene.
Congress is going to have to intervene….!
We need a think tank how to keep robots running……while everyone is sitting around penny-less.
hawken on November 17 at 11:44 a.m.
Of course,,,, the hyper-liberal left policies of Obama, which has only extended this great recession/depression…. has absolutely, NOTHING… to do with our ongoing economic distress…. Of course not!
Just as the hyper-liberal left policies of FDR did NOT extend the first Great Depression! Liberal left Americans are historically illiterate! Or, at least, ideologically blind…. Or,,,, possibly in denial, like a severe alcoholic.
The only thing that got us out of FDR’s mess was WWII.