Although it's growing slowly but steadily, the nation's economy faces a 25 percent chance of slipping back into a recession in the next nine to 18 months, a former Federal Reserve economist said at the Boulder Valley Real Estate Conference in November.
Mark Snead, founder and president of economic analysis firm RegionTrack, gave the forecast. Before founding RegionTrack, Snead was vice president and Denver branch executive of the Federal Reserve Bank of Kansas City. His responsibilities included serving as the bank's regional economist.
Snead is not especially pessimistic about the “fiscal cliff,” which would see the federal government cut spending next year while simultaneously raising taxes unless a deal is cut by the end of this year. Going over the cliff could lead to some ugly GDP numbers, he said, but the data would look worse than conditions really are.
“I really expect this to be a non-issue,” he said.
GDP – gross domestic product, the standard measure of economic health – is showing minor growth every quarter, Snead said. Digging deeper into the numbers, indicators such as retail sales and the unemployment rate are better, which shows the recovery has traction and in some ways has returned to normal.
“If you looked at this data, you would think we're looking at very normal conditions,” Snead said.
What hurt, he said, was how bad the drop was in 2008 and 2009, plus the absence of the usual rebound in growth that follows most recessions.
“We just didn’t have that bounce or that surge,” Snead said.
Commercial real estate did not emerge from the recession unscathed, but it could have been much worse, Snead said. In 2009 and 2010, many forecasters were expecting the industry to crash as hard as the residential market.
“Commercial real estate has actually made tremendous progress, and I'd argue it’s off the radar as an area of concern,” Snead said.
Industries such as agriculture, energy and professional services are doing well, as is manufacturing. Telecom, construction, tourism and publishing are not doing as well.
The nation is not out of the woods, though, Snead said, and the threat of a recession is real if not likely.
Problems in Europe or slower growth in China and the rest of the developing world could provide a drag, he said, adding that bad economic policy from Washington also could be a shock.
The conference, held at the Millennium Harvest House Hotel in Boulder, was sponsored by the Boulder County Business Report and RE/MAX of Boulder, Inc.
Courtesy of the Boulder County Business Report.
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