Economic Forecast: it’s getting better, slowly
February 6, 2010
The Park City Chamber/Bureau’s Groundhog Day Economic Forecast luncheon Tuesday was full of optimism if you’re willing to be patient.
About 450 commercial spots promoting Park City as a ski destination are currently running in the Los Angeles market and advanced reservations for President’s Day look decent, said Chamber/Bureau president Bill Malone.
Customers have changed their behavior, but Park City businesses have adjusted to the "new normal" and the Chamber/Bureau is looking forward to 2010, he said.
Featured speaker Jeff Thredgold of Thredgold Economic Associates calls himself an economic "futurist." His speaking engagement was partly-sponsored by Zions Bank and was held at the Grand Summit Lodge at The Canyons.
According to three different economic indicators, the recession has ended and positive growth has already begun, Thredgold said. He predicts by the middle of this year it will be declared that the recession ended in late summer of 2009.
Unfortunately, that won’t necessarily lead to a quick recovery of jobs, the construction industry or the retail sector. This recession was two and a half times longer than previous ones, and wiped out all the job growth achieved during the previous boom cycle. The last quarter was the worst for the U.S. economy in over a quarter of a century, he said.
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Don’t be surprised if the unemployment rate continues to rise, he added. One reason is that many people quit looking for jobs. As the economy improves, they’ll come off the bench and enlarge the number of people competing for openings.
"Our economy demands and rewards patience," Thredgold said.
Thredgold also offered these observations about the global economy:
Competition in many forms will dictate changes over the coming decade, he said.
India is the world’s largest democracy, but it also now has the largest number of people labeled "middle class" as well as the largest number of English-speakers. South American nations, especially Brazil, are expected to increase their relevance in the world economy in the coming future. Mexico’s economy is expected to improve in 2010, and Canada began reporting job growth five months ago.
China is expected to slow the growth of its economy in the coming years to prevent inflation.
But with this competition in mind, Thredgold said he doesn’t fear America will lose relevance in world trade. In fact, the impact of the nation’s recession on the rest of the world actually shows its relevance to be more "clear cut" than at any time since the 1950s, he said.
He doesn’t believe nations like China will be able to keep up their growth unless American consumerism returns. As long as American workers are hurting, the world’s economy will be kept in check. And America’s working class is suffering more now than it has in decades, he said.
That makes him worry about deflation an impact Japan experienced after its deep recession. Deflation seems good at first, but just as vacationers book hotel rooms at the last minute to make sure they’re getting the best deal, consumers will begin holding off on many purchases to see how low prices will go.
That will inevitably lead to cuts in salaries, and reductions in buying power, he said. Increased competition from other countries will add to the steep competition already existing domestically. Rather than worry about how to sell a rise in prices, companies will have to defend not lowering prices, he said.
The silver lining for the next decade comes from retiring Baby Boomers, Thredgold said. As "The Greatest Generation" dies and leaves inheritance to the Baby Boomers, it will be the greatest transference of wealth the world has ever seen. It will save some from their failure to adequately plan for retirement. For others it will fund more leisure during their senior years.
Thredgold predicts the health care, financial planning and leisure industries to do well over the next 10 years.