Anderson forecasters take economy talk to Bay Area
By Michael Lee
April 8, 2004 9:00 p.m.
The UCLA Anderson Forecast took its show on the road Thursday
night with national, state and local economic predictions presented
in the San Francisco Bay Area.
The event, presented by Senior Economists Joseph Hurd and
Christopher Thornberg, featured a short summary of recent
developments and their implications for the future.
Issues discussed ranged from Europe’s current struggle
with social welfare programs to the national impact of the Bush
administration’s massive tax deferrals ““ not to be
confused with true tax cuts where the government lowers both taxes
and its own spending, according to Thornberg.
Andrew Flessel, a member of the Bay Area chapter of the Anderson
Alumni Association who first proposed Thursday’s event to the
Forecast, said the event would introduce local alumni to Hurd
““ the newest member of the Forecast’s team ““ who
makes his home in the Bay Area.
Though the Forecast has traveled to Northern California before
““ including to Sacramento and Sonoma ““ it only has done
so about every other year.
Flessel hopes the Forecast will increase the frequency of its
events, perhaps to several times a year.
The picture Hurd presented is similar for both the nation and
the state: The first signs of recovery from economic downturn are
showing, but growth has not quite started ““ and in any case,
it will be modest growth at best.
“The state has turned the corner, and the forecast calls
for an OK year ““ not great, but an improvement from where it
was; positive signs, not gargantuan growth,” Hurd said.
The remaining major issues of the state are the budget crisis
and debates over worker’s compensation.
“As long as these things are being dealt with, they will
progress,” he added.
The Bay Area is an appropriate venue for the Forecast’s
latest trip outside Los Angeles because, as Thornberg said, it is
linked to understanding the current cycle of economic growth.
What some people are expecting ““ and what Wall Street and
the Bush administration believe is happening ““ is the
beginning of growth at the end of a natural economic downturn.
Instead of a natural boom-and-bust cycle, Thornberg said the
Forecast predicts a recovery from the collapse of the artificial
bubble that arose from the runaway success of the dot-coms and the
biotech industry in the Bay Area. Â The boom of 1997-2001 was
an illusion, Thornberg said.
“Walking out of UCLA undergrad, you’d receive a
$30,000 signing bonus with your first job ““ that’s
ridiculous.”
Because a downturn that follows a bubble is unnatural, the best
that can be hoped for is a return to the pre-bubble economy.
For the national economy, Thornberg says the ledger is
balanced.
Factors working against economic recovery include aggressive
consumer spending, increasing debt, overheating the housing market,
and even deeper government debt, as the Bush administration lowers
taxes while spending more on the U.S.-led war on terrorism.
The most positive recent signs of recovery and future growth are
increases in business spending and exports.
The labor market, Hurd said, will continue to remain low for a
while but may see some growth as demand increases.
According to Thornberg, the mission of the conference ““
and of the project in general ““ is to provide context as well
as projections, what he calls “the three W’s ““
what is happening, why it is happening, and where we are
heading.”
“We all have to be soothsayers to some extent,”
Thornburg said, as every decision in business is based on
predictions of what the consequences will be in future months or
years.
