2010-10-07 / Business
State lagging as key economic indicators continue to slump, expert says
A bearish forecast
A heavy regulatory environment and other governmental missteps continue to delay the recovery of small businesses in California, the Greater Conejo Valley Chamber of Commerce was told at its annual economic forecast breakfast last week in Thousand Oaks.
The administration’s “too big to fail” philosophy has helped America’s large corporations, but not the small entrepreneur, said Dr. Bill Watkins, director of the Cal Lutheran University Center for Economic Research and Forecasting.
“Big business will do better; small business will just get harder and harder,” Watkins told the 95 local business men and women who attended the Chamber session.
“Congress is attempting to stimulate the economy any way they can,” said Andy Smith of Smith & Wooten CPA, the event sponsor.
But according to Watkins, “Too big to fail’s a huge problem.”
In California, Watkins bemoaned the loss of the middle class.
“There are jobs for rich people and jobs for those who take care of the rich people,” said Watkins, who gained notoriety last year by suggesting California is becoming increasingly likely to default on its debt. He said the state’s poor fiscal discipline has made matters worse.
Watkins favors more legal immigration to spur growth.
“Baby boomers and immigrants need each other,” he said.
The public shouldn’t assume California will bounce back from the recession, as it’s done in the past. For the remainder of the year, growth in the state will underperform the rest of the country and, Watkins said, “Unemployment will remain in double digits as far as we can see.”
Ventura County has lost 33,000 jobs in the recession.
People are out of work in part because the investment in infrastructure has dropped from 20 percent to 5 percent of the state’s spending, Watkins said. Healthcare remains the only sector that has gained jobs.
And he said the home mortgage mess remains a deterrent to economic recovery.
The U.S. homeownership rate peaked at more than 69 percent in 2007. The rate still hasn’t declined to the 64 percent range where it needs to be, Watkins said.
“Not everybody should own a home,” he said.
Although commercial real estate is following the downward spiral of residential real estate, the commercial market is only about a third as big as the home market, Watkins said.
And when does it all end?
“The recession is over when you’re back to where you started, in which case it could be a long time,” he said.
Some good news from the experts: Retail sales are showing signs of life as the holiday season approaches.