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The Economy 2012
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  • Redo with latest
  • Redo with latest, what about yield curve?


  • 1. CA Urban/Community Forest Conference: The Economy 2012 P alo Alto, CA September 16, 2011 Robert Eyler, Ph.D. Professor, Economics Frank Howard Allen Economics Research Fellow Director, Executive MBA Program Sonoma State University [email_address]
  • 2. Major Economic Issues
    • A year of mixed signals and international issues
      • International concerns worldwide
    • Domestic economy in US continues to struggle
      • International issues transmission to US
      • US issues transmission to world building: is the debt a big deal?
    • State: Budget passed, mix of cuts and new taxes
      • Where will the new unemployed public workers find jobs?
      • Is there a commitment to anything in Sacramento?
    • Commercialized science the key long-term: pulls all behind
      • Where is the investment?
  • 3. What we have tried
    • Monetary Policy: about $1.2 trillion
      • Generate investment from lower interest rates and increasing money supply
      • Good: stimulated exports
      • Bad: inflation potential and lack of focus
    • Fiscal Policy: over $800 billion
      • Advertised as “New Deal 2”, some of that happened
      • Lack of investment in science, no focus here either
      • New jobs packages more rhetoric than real for now
    • If innovation and entrepreneurship the way out of recession, not much direct investment
  • 4. Source: Federal Reserve Board
  • 5. Source: Federal Reserve Board
  • 6. Source: Federal Reserve Board
  • 7. S&P 500 Index, 1990 - Present Sources: Reuters and CREA at SSU
  • 8. S&P 500 Index, 2007 - Present Sources: Reuters and CREA at SSU
  • 9. Philadelphia FED Business Survey, 1968 – Aug 2011 Source: Federal Reserve, Philadelphia
  • 10. What we want (or should want)
    • Investment in solutions to scientific problems
      • We know these problem are coming or are here
    • To remain the technological and scientific leader worldwide
      • We know competition is coming from all points on the globe
      • Who in here likes math?
    • To create jobs and businesses
      • Science has a large multiplier effect on our economy
  • 11. Source: BEA (
  • 12. Source: BEA (
  • 13. Source: BEA (
  • 14. Unemployment Rates, US and CA, Seasonally Adjusted, 1976-2011 Source: BLS (
  • 15. California
    • 2011-12 likely to be slightly better than 2010-11
      • If recovery is truly in place, CA will feel effects of recovery
    • Labor market still the big deal
      • Private and public issues: job creation vs. destruction
      • Need to stimulate jobs and business and retain both
    • CA slowly bifurcating in terms of housing markets
      • Interior valleys likely to have a Japanese-like recovery
      • Coastal recovery dependent on general economic recovery and conversion of emerging wealth to housing demand
  • 16. TechPulse Index, Jan 2007 = 100 Source: BEA (
  • 17. Source: BEA (
  • 18. Source: BEA (
  • 19. Investment in Environmental Change
    • Three biggies:
      • Peak oil, petroleum use and culture
      • Generalizing the use of renewables: wind, solar
      • Rising oceans and climate change effects
    • Three issues
      • Lack of ROI short-term: need to commoditize solutions
      • Political will around this, especially in CA
      • Bad advertising to Wall Street: housing markets a good example of how Wall Street works
  • 20. Housing and Environmental Issues
    • People make consumption choices, households make savings choices
    • Forestry use: are we still using new wood to build?
    • Need households to generate demand for many environmental solutions
      • Do teenagers consume micro-wind turbines?
      • Do teenagers consume solar paneling, low-flow toilets, instant hot water heaters?
      • Do people see oceans rising?
      • Are teenagers buying high MPG cars en masse?
  • 21. Environ Employment, 1990-2011, Index (1990 = 100) Source: BLS (
  • 22. Peak Wood? Index (1979 = 100), 1979-2011 Sources: BEA (Residential) and BLS (Softwood Prices)
  • 23. Where are we headed?
    • Recession-like activity through 2011: labor markets
      • Hiring not concentrated in private firms or with sustainable funding
      • Unlikely to see a national surge in 2012, as elections and continued uncertainty will drag
    • CA economy now starting to pull and push
      • Tech firms and activity doing well
      • 2012 as an election year may also slow things down
    • Recognize slower growth and better choices
      • Economic development choices have economic and environmental effects on communities
      • Investment in solutions to scientific problems a good long-term, slow growth bet