Experts: 'Perfect storm' resulted in economic woes

SANDPOINT - With the economy in disarray, Bonner County residents aren't alone in wondering if there's more trouble ahead.

The "perfect storm" of economic troubles began with a glut of new homes built throughout the country and continued with lenders offering unqualified buyers exotic mortgages and followed with the sharp decline real estate value. The recap was part of a keynote speech given at Thursday's economic forum by D.A. Davidson vice-president Tom Gibson as he localized some of the events that triggered the country's recent economic woes.

As the events merged, they formed a perfect storm of economic troubles that led to the collapse of several word-renowned investment banks and, eventually, to the federal bailout bill.

Even in these tough times, Gibson touted several rays of sunlight Sandpoint residents can look toward, such as low gas prices, cheaper real estate and a strengthening dollar.

"People want to live in Sandpoint. That's the good news. People want to live here," Gibson said.

Thursday's forum attracted a who's who of local industry leaders who broke down how national issues could impact the area's economic future. The event was presented by Mountain West Bank and hosted by the Greater Sandpoint Chamber of Commerce and the Bonner County Economic Development Corporation.

The well-attended forum examined how downturns in the macroeconomic climate might affect Bonner County in 2009.

Speaking about the banking sector, Intermountain Community Bancorp CEO Curt Hecker tried to put the economic crisis in perspective, reminding residents that recessions and depressions are a normal - if frustrating - part of capitalist societies.

"This situation has caused tremendous fear, which is something we have to overcome," Hecker said.

Although he warned against knee-jerk overreaction to the slipping economy, Hecker did acknowledge that the problems are real and will effect Bonner County.

"Bonner County has been impacted by the housing crisis and lack of liquidity, but not as much as the Boise area or Seattle or parts of California," Hecker said.

Quest Aircraft CEO Roger Franklin broke down the  issues facing the nation's manufacturing sector while warning the audience of what he called a "two to four year slog" in the sector.

"Who's excited about the economy right now?" Franklin asked. When nobody in the audience reacted, Franklin said, "Good, I won't shatter your expectations this morning."

Franklin said the crisis will affect consumer confidence and spending, which will in turn affect the manufacturers.

"Consumer spending accounts for two-thirds of the economy, so when consumers are hurting, the U.S. economy catches the flu," Franklin said.

The worst economic report of the morning came from Ken Carter, the resource manager for lumber company Welco, LLC.

As evidenced by the string of recent mill closures, the timber industry has likely been hit the hardest of all local industries, and Carter sees no immediate turnaround in sight.

"The lumber market is horrible and has no hope of getting better until 2010, at least," Carter said.