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The Economy 2012


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  • Redo with latest
  • Redo with latest, what about yield curve?
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    • 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