NEWS FLASH: On Monday Sept 20th the NBER announced the recession ended in June 2009.This is the longest post WWII recession, and likely will be the longest period of recovery to return to the former peak. The main them of todays presentation is that the recovery will be very slow. Consumers are paying down debt. So consumption growth will be slow. Employment growth will be slow, in part because people are immobile, due to the difficulties in the housing market. http://www.nber.org/cycles/sept2010.html
The coincident index is an attempt to identify the current state of the overall economy. Data availability forces us to use different info than we might if we were looking at the state or national level. Here we are using unemployment rates, private sector payroll employment, total private sector wages and total manufacturing wages, weighted by their standard deviations. We will be working on refining this model a bit, including measures of consumption such as retail sales.
Note that in the 90s and mid 2000s some counties experienced contractions. For the most part La Crosse entered after the national economy, but appears t still be in contraction mode.
Interest rates are at historic lows, yet not everyone can access the cheap credit. Some people have negative equity (about 23% nationally, less in WI). Some people have less than stellar credit. So some sellers appear to be resorting to second jobs as bankers. The process of getting out from being under water takes time. A lot of time. Households are rebalancing their financial position, deleveraging as it were…and this will take time.http://www.calculatedriskblog.com/2010/08/corelogic-11-million-us-properties-with.htmlhttp://s.wsj.net/public/resources/documents/info-NEGATIVE_EQUITY_0911.htmlPicture credit: Taggert J Brooks Cass and Losey La Crosse, WI
Recall that this is the average price of homes sold through MLS. Because this is not a repeat sales index, the homes being sold may be systematically different from one month to the next. Particularly since during the period of decline we had the first time home buyers credit, when we would expect less expensive homes were more likely to be sold thus bringing the average down.
I forecast foreclosures to fall short of their peak in 2009, though La Crosse County will experience more than last year rising from 263 to 307.
Eviction data was graciously provided by Professor Russ Kashian Director of the Fiscal and Economic Research Center at the University of Wisconsin-Whitewater, and the University of Wisconsin - Extension
Building has ground to a halt, and no multi unit permits have been pulled.
Jobs, Jobs, Jobs.
Unemployment duration continues to be very high. Some economists attribute that to the extension of unemployment benefits to as many as 99 weeks in some cases. The truth lies somewhere in between. The housing market and other structural rigidities are also contributing to the problem. Current mean duration is 33 weeks and median is 20 weeks.
MN is fairing a bit better than WI and the US which are still over 5% below their peak. At least 2 to 3 more years before employment returns to pre-recession levels.
These questions come from the Consumer Sentiment Survey conducted in early August. 1400 emails and about 350 responses. The national data is from a wsj national poll.A word of caution when interpreting these results as well. I survey the folks in this room, not exactly a random sample of the community, but a more highly educated, higher income, higher socioeconomic status group, than the national poll, so one would expect more job security, and probably a more positive attitude about the direction of the economy.
Politicians can do little to affect the course of jobs in the near term. Today we will discuss the ideas put forward by the Wisconsin way. Continuing the boat storm metaphor, its best to think of these issues in terms of building a better boat. We can’t do much to change the boat we are riding out the storm in at the moment, but we can thinking about building better boat for the future.Quote on Page 9
Politicians can do little to affect the course of jobs in the near term. Today we will discuss the ideas put forward by the wisconsin way. Continuing the boat storm metaphor, its best to think of these issues in terms of building a better boat. We can’t do much to change the boat we are riding out the storm in at the moment, but we can thinking about building better boat for the future.Quote on Page 9At this point in the storm, we have tried fiscal policy, and it has had some effect. But some policies, such as the first time home buyers credit, and the cash for clunkers have done nothing but forestall adjustment. They were akin to bailing out the boat, by filling the bucket with water in the front of the boat and throwing it to the rear of the boat.
Despite the fact that I and many others disagree with some of the proposals in the Blueprint for change, I want applaud The wisconsin way for their efforts and the work they have accomplished. Starting a dialog like this is a monumental effort and often thankless task. Yet without it, we would not be engaged in this discussion.
We face large budget deficits over the next budget biennium. Some of this is owed to the current recession, but some of it is “structural”. In other words some is due to the current storm, and some is due to how we built the boat. Lets be careful when solving the problems of the current storm, that we don’t destroy the boat. Take education. It would be completely self serving if I said we should preserve education in our budget. Source: http://s.wsj.net/public/resources/documents/st_STATEBUDGET100414_20100414.html
This is far better than reducing access to education. Yes tuition will rise, as the public subsidy disappears. However that is far better than the reduction in access that would happen if it remains public, but receives fewer resources and is not allowed to recoup them elsewhere.Education might not be a sufficient condition for economic growth, but it is a necessary condition.
How states collect revenue so they can conduct the business of government varies dramatically. Some states have no property tax, others have no sales while still others do not have an income tax.
Sept 2010 final
Economic Indicators:<br />An Update for the 7 Rivers Region<br />
Standard Disclaimer:<br />The views expressed today are my own, they probably do not reflect the views of the sponsors, and as will become apparent probably not my employer, or anyoneelse for that matter. Complaints can be emailed too:<br />firstname.lastname@example.org<br />
Paul Seabright - Company of Strangers<br />Politicians are in charge of the modern economy in much the same way as a sailor is in charge of a small boat in a storm. The consequences of their losing control completely may be catastrophic(…) but even while they keep afloat, their influence over the course of events is tiny in comparison with that of the storm around them. We who are their passengers may focus our hopes and fears upon them, and express profound gratitude toward them if we reach harbor safely, but that is chiefly because it seems pointless to thank the storm. <br />
Questions are drawn from proposals in the <br />Blue Print for Change. They can be found on page 11 in your booklet.<br />
Q1. How can the 7 Rivers Region alter its tax structure to collect the same revenue, but improve the economic climate?<br /> <br /> <br /> <br /> <br /> <br />
Q2. What reform will help our region most effectively create and retain college graduates?<br />
Q3. How can we identify and eliminate ineffective local public expenditures? <br />
Q4: How can the state best align income taxes with its desire to grow, expand and attract business and create jobs? (page 27 of Blueprint).<br />
Q5: How can the state increase its support for cluster industry, training and productivity initiatives. Specifically, enhance existing industry clusters such as agriculture, manufacturing, paper, forest products and tourism and emerging industry clusters such as high-tech, bio-tech, business services and IT-enabled services? (page 10 of Blueprint).<br />
Q6: Should the state create an economic development investment fund (i.e., a fund that would invest money in specific economic enterprises in expectation of a return on that investment) able to provide a two to one match for funds raised by certified regional economic development entities (i.e., those belonging to the confederation with certified business plans).<br />