All things being equal, economists can tell us important things about the future.
That’s one of the reasons Economic Alliance Snohomish County sponsors annual “forecast” lunches at which economists share their analyses and explain their expectations.
EASC, a regional economic-development organization, last week hosted Bill Conerly, a Portland consultant, and Stephen Lerch, the state’s director of revenue forecasts. Both economists cautiously painted mildly positive pictures of modestly resurgent prosperity around the nation, state and central Puget Sound region.
It was nearly exciting enough to distract attendees from their dessert and coffee. And then came a big disclaimer.
Conerly clicked to a PowerPoint slide that revealed just how well forecasters in 2007 predicted the great recession that handcuffed our nation’s economy during the subsequent three or four years. Lousy. They missed it entirely.
Reliance on aggregated statistics and historical patterns can give economists a high-degree of expertise about the way things usually go. But they have no special gift for expecting the unexpected.
This is why, Conerly told the crowd, business and government leaders should be mindful of two sorts of risk: the kind that comes when the economy cools off, and the kind that comes when it heats up.
Anyone who struggles to remain solvent these days understands the need to have response plans ready to go if the economy takes a dive. But, Conerly said, businesses also must have plans to quickly capitalize on upticks or they risk missing valuable opportunities.
Discussion of risk, of course, brings out the worrywart in most of us. So, Conerly and Lerch were asked what an area like Snohomish County can do to hedge against hard times or to effectively exploit good times. Both economists had the same prescription: Be a place where people want to live.
Robust population growth, Lerch explained, keeps the housing market strong, puts more disposable income into circulation and strengthens the local workforce.
In an era when the best paying jobs are going to scientists and computer whizzes, a community needs to invest in the things that attract not only those kinds of businesses, but also those kinds of workers. Recreation and entertainment “infrastructure” can be as important as transportation or communications infrastructure. Excellent schools and libraries can be as great an economic boon as a streamlined regulatory or tax system.
County leaders should take the lesson to heart. Quality of life is not a mere byproduct of prosperity — it can be an important catalyst for it.
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