Economy improving on local, national level

SANDPOINT — It may not be pretty and it may be slow, but the country has turned the corner on the worst recession since the 1930s.

That was the message from a slate of speakers at the 2010 Economic Outlook Forum on Thursday.

“We’ve lived through quite a period over the past several years,” said  keynote speaker Fred Dickson, chief market strategist for DA Davidson. “Over the past 2 1/2 years we’ve gone through the most devastating recession we’ve seen since the Great Depression in the 1930s.”

In terms of economic recovery, the country is turning the corner and starting to head up, Dickson said.

“People that I’ve talked to are starting to look ahead, think about hope and really feeling, for the first time in about 18 months, a little sigh of relief,” he added. “Basically, they’re starting to say it feels a little better than it did three to six months ago.”

Looking back, Dickson said leaders of the Federal Reserve, U.S. Treasury and the Council of Economic Advisors have determined that the country was on the brink of a very significant economic and credit crisis collapse. However, the consensus by economists is that the country has seen a fairly significant rebound from the astronomically low levels in the bond market last fall.

Perhaps the biggest of the steps taken by the government to stabilize the economy was a $3.5 trillion guarantee of money market funds.

“It’s incredibly important,” Dickson said. “You have to have confidence in where you’re investing to be able to maintain those investments in place without have a run on that particular aspect of the financial system.

“In my mind, that was the most important thing they did.”

While national unemployment has hit 10 percent and it likely won’t improve much in the short term, Dickson said overtime and temporary work hours have picked up.” Those are precursors to an upturn in the country in employment but that probably won’t happen until the middle part of next year,” he added.

Signs began pointing toward recovery in early April and leading indicators have continued to improve every month.

“We may not feel it on Main Street but we’re starting to see the trend,” he said. “It started with housing prices stabilizing in a number of markets and banks starting to lend to each other and customers, not in a big way but the negative trend absolutely stabilized.”

While October’s job losses of 193,000 is a large number, the total is dramatically less than January 2009, when 741,000 jobs were lost. The rate should continue to decline and manufacturing is showing signs of incremental growth, Dickson said.

Businesses around the country are beginning to feel better and are looking are rehiring a few of the people they laid off but are holding back until they know the details and ramification of health care legislation being debated in Congress, Dickson said.

Banks are continuing to lend but have become more selective. Banks that have received money from the government are caught in a “catch -22” where they are constrained by regulations requiring them to keep more money in reserves. That should change in the next year as lending restrictions ease, he said.

The recession has been tough locally, with jobless rates hitting 12.5 percent in Bonner County and 15.9 percent in Boundary County. That compares to 11.1 percent in Kootenai County and 10.2 percent nationally. While numbers aren’t kept for individual cities, it’s likely unemployment in Priest River is about 25 percent due to the loss of about 400 timber-related jobs, said  Bridgette Bradshaw-Fleer of the Idaho Department of Labor office in Sandpoint.

However, there are bright spots as well, with manufacturers like Quest, Unicep, Cygnus and Encoder expected to expand in 2010. Pneumex is expanding, and Litehouse started a new product line and teamed up with Dreamworks on its Madagascar 2 promotions.

While lumber prices have devastated the area’s timber industry, stimulus projects and increased consumer confidence may allow construction to pick up by mid-year, according to regional labor economist Kathryn Tacke. Stimulus funds have helped the area’s transportation sector and the health-care has held stable during the downturn and the long-term prospects are for strong growth in the sector.

With incomes and employment expected to start rising in the spring, 2010 should boost local consumer spending, she said.

“It’s hard to say exactly how long it will take for the U.S. economy to recover and then start pushing Bonner County’s unemployment rate down,” Tacke said in an analysis of the region’s economy. “My best guess is that the local economy has already turned around but unemployment will remain high through the winter. Next spring, employers then may feel confident enough to increase employment.”