Published March 2001

Economists offer healthy outlook for year ahead

Relax. This year’s local economy, and the nation’s, probably will be better than you think.

That’s the summary view of two economy watchers: Marples Business Newsletter Editor and Publisher Michael Parks, who presented his views at Frontier Bank’s recent annual economic outlook program, and John Mitchell, U.S. Bank’s eminent senior economist, who made his predictions before the South Snohomish County Chamber of Commerce.

Neither man really thinks he knows what will happen to the local and national economies this year, and they both admit it. Parks, in fact, quoted a 1999 article from The Economist in which some of the world’s most brilliant economists predicted $10-a-barrel oil would plummet to $5 a barrel by the end of that year. Instead, oil soared to $30 a barrel.

That said, it’s worth noting that both men’s educated guesses predict a better economy this year than most Americans are picturing. Parks quoted a German economist who said the rest of the world sees our numbers and wonders what Americans are worried about.

The Gross Domestic Product grew by 8.3 percent during the fourth quarter of 1999 but only 1.4 percent during the last quarter of 2000, with several key industries slowing their pace. However, the national jobless rate is still just over 4 percent, very low by historical standards; productivity is strong; and inflation remains low (except for energy rates, which Parks calls “a temporary problem”).

Also, in the Puget Sound, the biotech, software, telecommunications and aerospace industries have a strong presence. Boeing is expecting to grow its 75,000-employee work force by as much as 15,000 in coming years, and Microsoft alone has hired as many people as the area’s dot-com companies pared from payrolls in the past year.

Mitchell said that despite present recession concerns, economic growth appears to be continuing into its 119th month of expansion, since early 1991, marking the longest economic growth period in American history. Even before that, the economy grew steadily from November 1982 to the summer of 1990 before it was slowed temporarily by eight months of mild recession.

The “R” word is a key focus for trackers of current economic trends, obviously, but both Parks and Mitchell believe the Fed’s use of interest-rate cuts will be a key part of the effort to reboot the economy. An almost certain Bush administration tax cut should give the economy another boost.

Have confidence, be creative and don’t despair, they said, because there’s no sense talking ourselves into a self-fulfilling prophecy of recession. A more positive response would be to talk ourselves into more prosperity.

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