Economist paints positive picture for area
Northwestern Nevada has a lot going for it, according to economist Christopher Thornberg, of Los Angeles-based Beacon Economics.
The influx of new businesses and industry has created a more balanced economy and an improving reputation, he told the NNBW in a phone interview.
“The job trends are crazy strong,” said Thornberg, who will speak in Reno on Sept. 12 at the First Independent Bank’s 2017 Fall Economic Forum. “Unemployment is crazy low. It’s getting harder and harder for employers to fill spots.”
That could be a thorn in an otherwise rosey picture. If education and training programs don’t sufficiently increase the pool of skilled workers, the gains could turn around.
“Reno could start choking on its own prosperity,” he said. “Employers could end up frustrated and move out.”
Thornberg, founding partner of Beacon Economics, LLC, and a sought after economic consultant, including for the California State Treasurer’s office, was an early voice warning in 2006 that the national economy was headed for a crash.
He noted three factors that are essential to economic forecasting: trends, fundamentals, and policy.
Trends are important because what happened last year is very likely to tell you what is going to happen, he said.
The fundamentals of the economy — home construction, borrowing, debt — before the recession “were lousy,” he said.
“It was obvious that it was going to happen,” he said. “But it was harder to predict when. I thought (the recession) would happen earlier, in the second quarter of 2007.”
He wasn’t too far off. Officially, the Great Recession started in the first quarter of 2008.
For now, Reno and the U.S. economy are riding a wave of expansion. Thornberg disagrees with the voices that say that, after seven years of economic expansion, the U.S. is due for a downturn.
“That’s just completely wrong,” he said. “Expansions don’t get old. They continue until they’re murdered by something else.”
He admits that the stock market is kind of “frothy,” and Cap Rates are low, but that’s not enough to throw anything out of balance, he said.
What could “murder” the economic expansion is the third factor: public policy.
“Policy is a slow turning boat,” he said. Policy that is happening now won’t affect the economy for about three years. Economists tend to focus on one- to two-year forecasts, he explained.
What happens in Washington does have an effect, even if delayed. Thornberg called the Trump administration’s proposed trade policies “dangerous.” A trade war with China could be devastating to the U.S. economy.
“That’s the biggest uncertainty,” he said. “We don’t know where the Trump policy is going. … We’ll have to wait and see.”
Thornberg will bring his economic insights to Reno as the keynote speaker at First Independent Bank’s 2017 Fall Economic Forum, 7 a.m. to 10 a.m. on Sept. 12, at The Grove.
Brian Bonnenfant of the University of Nevada, Reno’s Center for Regional Studies, will provide additional insights on economic conditions in the area.
A limited number of tickets are available for the general public. They can be reserved in advance by contacting Ashley Hernandez at firstname.lastname@example.org.