Source: Business Examiner Media Group
Bill Conerly had good news to deliver at today’s Regional Economic Forecast & Innovation Expo: The world economy is supposed grow a “hair faster” in 2015 and 2016.
But businesses should be prepared, warned Conerly, economist and senior fellow at the National Center for Policy Analysis. There is a 12 percent risk of recession within the next couple of years; depending on what the federal government does, that could be a mild recession or a severe recession.
While 12 percent doesn’t seem like a lot, it’s not too crazy to have a contingency plan, Conerly said.
“Chew on this for a little bit,” he said. “Twelve percent risk of recession. Compare that with the other risks that you lay out hard money to deal with: car insurance, the risk of a crash is less than 12 percent; the risk of dying next year is less than 12 percent; you got fire insurance, the risk of fire is less than 12 percent.
He continued, “How many of you have a plan, somebody in your company has a plan, for what you’re going to do in the next recession? Very few people have a plan for the next recession. A recession is more likely than an asteroid coming from outer space, that’s common sense language, whether you’re a for-profit business, a not-for-profit, or a government agency. You have to have a plan.”
Still, businesses shouldn’t do too much handwringing. Consumers have been increasing spending about on pace with their incomes. While spending isn’t at an all-time high, consumers are no longer “hiding in a hole and trying to imagine a disaster coming,” Conerly said.
“You’ll probably see the increase in consumer spending more in tourism. I’m expecting Washington state and Oregon to do a little better than the nation, so that should help,” Conerly said. “In terms of housing, I think we’re going to see a lot of strength in the housing sector nationally. That’ll affect your wood products industry with the demand.”
Conerly noted that the nation is on track to produce one million new homes. He said 1.2 to 1.4 million new homes need to be created to accommodate for the growing population.
“We need to start producing more and I think we’re going to be doing that,” Conerly said.