CSUF Economists Present Forecast for Coming Year
Oct. 25, 2012
Cal State Fullerton President Mildred García and Andrew J. Cecere, vice chairman and chief financial officer of U.S. Bancorp, addressed the gathering.
"No matter who wins the election, the big issue is the 'fiscal cliff'," said Anil Puri, dean of the Mihaylo College of Business and Economics, at the Oct. 25 Economic Forecast Conference sponsored by Mihaylo College and the Orange County Business Council.
More than 800 business, community and government leaders attended the event, where Puri pointed out that "after three years of moderate growth, fraught with near-recession risks, people are still sitting on the sidelines. ... there is so much uncertainty right now."
CSUF President Mildred García and Lucy Dunn, the council's president and chief executive officer and a CSUF alumna, welcomed the audience to the 18th annual event held this year at the Irvine Hyatt. Both discussed the long-standing partnership between the council and the university, with García noting that she wants to make such "vital partnerships a hallmark" of the institution.
Puri was joined on the stage by Mira Farka, co-director of the college's Institute for Economic and Environmental Studies, and Andrew J. Cecere, vice chairman and chief financial officer of U.S. Bancorp.
The "fiscal cliff," the economists explained, is the pending expiration of a host of previous tax cuts, a series of "crisis-legacy benefits" and scheduled automatic spending cuts, if government officials don't figure out how to manage the national debt. If we take the "cliff-dive," Puri warned, "the economy will plunge headlong into a recession, which is likely to last until the end of 2013.
"Politicians have heard the calls and know the stakes: There is ample evidence suggesting that once the election cycle is over, negotiations will begin on how to deal with the cliff," he noted.
In addition, Puri cited two other risks to moderate and sustained growth — the continuing Eurozone crisis, which is a source of uncertainty in the global economic landscape, and a marked downshift in the global economy.
Longer term, the economists noted in their forecast report, the national economy will "continue to face a number of significant structural challenges. Some of these are simply a continuation of deep-seated trends that began decades ago related to demographic shifts, post-industrialization, globalization and innovation.
"More worrying is the fact that some of the cyclical trends that started during the Great Recession may ultimately turn into structural challenges," the report states.
Still, Puri, Farka and Cecere all cited areas of good news in the economy. Cecere said that the nation is "in a good position" and encouraged people to be more confident in the economic recovery.
"Our baseline outlook for the U.S. economy remains one of continued moderate growth — 'no boom/no doom' — at least over the next year," said Puri. "Much progress has been made, and the economy is now on a noticeably stronger footing than a year ago."
"Though real gross domestic product has made up all lost ground since the recess (and then some), it took a full two-and-one-half years to reach its pre-recession peak ...," Puri said. "Despite current headwinds, we anticipate U.S. real GDP to continue to grow over the forecast horizon."
"In our baseline case, the U.S. economy is expected to grow by 2 percent in 2012, 1.8 percent in 2013 and gather more steam in 2014."
Other positives that the economists noted:
- The labor market, although sluggish, is improving;
- Housing has turned a corner and is slowly on the mend;
- Consumers are expected to continue to add to growth, "though the pace will remain subdued, at least over the next year"; and
- Financial markets are on an upswing.
OC and the Region
Locally, Puri said, an emerging economic recovery is evident throughout Orange County, Southern California and the state.
"The good news is that Orange County's recovery has recently gathered more strength than the national economy," Puri said. "In particular, after the deep national downturn led by the housing sector collapse, the county's housing and construction sectors have shown real signs of a self-sustained, broad-based organic recovery."
In employment, Puri said, there are signs in the county's four major sectors: high-tech, leisure and hospitality, professional, and business services and construction.
"We expect the Southern California economy to continue to improve, albeit at a more moderate pace, in the short term, and more robustly by the end of 2013, early 2014. It should be pointed out that while we expect the region's recovery to proceed at a slightly faster clip than the national economy, growth in the region will still be subpar when compared to its pre-crisis trend."
Endowment Campaign Announced
During the forecast, Puri announced the kickoff of a $1 million endowment campaign — and a challenge pledge of $500,000 from James D. and Jeanette Woods — to support and sustain the college's annual economic forecast and analysis. To read more, go to “Business Dean Announces $1 Million Endowment Campaign.”
By: Pamela McLaren, 657-278-4852