Economist John Mitchell was miked and prowling the audience, a business breakfast's crowd’s Oprah without the free cars or gift baskets. At one point during Mitchell’s detailed but entertaining and humorous summary of the bitter economy, a man whispered to his tablemate: “I could use a glass of wine.”
Mitchell is a well-known war horse on the speaker’s circuit. Now a consultant, he was the chief economist for U.S. Bancorp for years and has been making economic presentations around the country and region for decades. Mitchell was at the Governor Hotel presenting his 2010 economic forecast at a forum hosted by the Portland Business Alliance Wednesday, and as he paced around the room, he went through a painful recounting of where we stand.
Among the litany of woe: every state has year-over-year employment declines; it's longest recession in 78 years; and the federal government is borrowing 40 cents of every dollar spent. Yet, technically the recession is over with third-quarter 2009 seeing a small rise in GDP; housing might have reached its bottom; the global economy is improving; and there has been an uptick in employment over the past few months in 28 states.
“We are now in a world of rising forecasts,” Mitchell noted.
But he allowed that the U.S. economy still faces strong headwinds: it will be a slower than normal upturn; consumers are cautious; wealth is declining; the commercial real estate industry will continue to tank; high unemployment will persist; and credit will be tighter. He also called out policy issues that are looming that will write the check on the future: medical coverage and its cost; unfunded entitlements such as Medicare and Medicaid; environmental issues such as climate change; financial regulatory policy such as whether the Fed will remain independent; and immigration.
Mitchell flashed a slide of a grave marker at the Little Big Horn battlefield in Montana where Custer met his doom (“I always like to toss in a few vacation slides”). A fire swept across the area years ago, and uncovered artifacts that had remained unknown and hidden until then. Because of that, historians were able to finally gather more information about what happened during the battle. That’s what he predicts will be the case with this period in American history. “We don’t know all that has happened,” Mitchell said about the past two years of seismic economic events. “For decades, we will uncover what happened.”
As always, Mitchell ended with a poem about the economy. It isn’t often you get to mix economics and poetry, and it never fails to make me chuckle (bring me that glass of wine and I'll laugh even harder). So I’ll close with a snippet from Mitchell’s ode:
2010 will be a much better year.
That is not to imply that there is nothing to fear.
We are coming back to a different place.
There are very difficult decisions to face.
At this point the headwinds will still be a drag
Deleveraging, old loans, state and local fiscal sag.
Don’t forget the resilience that has marked our space.
The surprise may be a stronger pace.
Robin Doussard is the Editor of Oregon Business.