Fiscal expert talks economy at Solano EDC breakfastAugust 16 2019
The Reporter By NICK SESTANOVICH | firstname.lastname@example.org |
PUBLISHED: August 15, 2019 at 5:31 pm
When economic expert Dr. Robert Eyler planned his address for the Solano Economic Development Corporation’s forum breakfast Thursday, he was probably not anticipating to do so the day after the Dow Jones industrial average dropped 800 points.
But such is the nature of the economy, and Eyler used his address to talk about recent economic trends nationally, statewide and at the county level so attendees could be prepared for the future.
The forum was held at Travis Credit Union’s headquarters with approximately 180 dignitaries in attendance. After the crowd enjoyed bagels and pastries provided by Panera Bread, TCU President Barry Nelson welcomed the attendees and Solano EDC CEO Bob Burris gave a short presentation on the agency’s highlights and goals. Burris then introduced the keynote speaker, Eyler, a professor of economics at Sonoma State University and president of the firm Economic Forensics and Analytics.
Eyler said one of the reasons for the stock market’s volatility was a sense of unpredictability in politics.
“What is going on in the White House and in Congress and then starting to look forward toward elections in 2020 suggests a lot of policy uncertainty in the future,” he said. “That’s problematic for economists. We don’t like uncertainty, and the markets don’t like uncertainty.”
In regards to people’s fears of an upcoming recession, Eyler said an economic slowdown was likely but a recession would not likely happen for another 12 to 15 months at the minimum.
“There’s a slow-rolling window of forecasts that are happening…that suggest the slowdown is only gonna be so far down, and we may not actually have a recession through 2022,” he said. “It’s sort of hard for me to fathom that as an economist, but some of the underlying characteristics of the economy are not recession-ready yet, if you will.”
This was especially important, Eyler said, with an election coming up next year.
“National politicians are gonna be very concerned about how much more policy uncertainty they want to put in the economy with the idea that, generally speaking, with a good economy, incumbents stay in place,” he said.
Eyler also weighed in on the trade war between China and the United States and the imposing of tariffs on Chinese goods.
“The idea of a trade war ultimately is because you’re concerned about protecting either your goods and services or your intellectual property, and that’s what this has been sold on,” he said. “Will it have an effect on prices? The answer at some point is ‘absolutely’ if it continues on and gets broader in scope. But we have not seen that yet. What we’re seeing in passing is really what’s happening in other countries.”
For example, Eyler said Australia was one of the “supply chain starting points for China.” Since China has started seeing some real demand because of tariffs, he said, its supply chains have been impacted.
“Other countries are being affected somewhat negatively,” he said.
On the other hand, Eyler said, countries like Vietnam have been positively affected.
“There’s a real wild global mix out there of what’s happened but none of it has really come into price increases in earnest yet but we should expect that to creep,” he said. “Who does it hurt first? It hurts low-income commuting workers first. Just like any other tax that is basically a consumption tax, it’s regressive.”
Eyler said the supply chain uncertainty would likely hit some places in Solano County.
“If this tariff situation continues on and that starts to leak into European trade partners with China or supply chain partners with China, it will start to affect companies that are based here, at least somewhat,” he said.
Additionally, Eyler said agriculture communities would “feel some of the shock.”
“If you’re in the wine industry, for example, the wine industry has already felt some of this when they have markets in China,” he said. “That’s something to watch going forward is how much more risk is imputed because of these policy choices.”
Eyler said it would be smart for Solano to have more international firms.
“That gives a global exposure and a lot more diversity to the Solano County economy,” he said.
Eyler said there were a number of highlights in Solano’s economy in recent years, including a decreasing industrial vacancy rate, continuing population growth and some reduction in poverty.
“Relatively speaking, Solano County continues to improve in terms of converting work opportunities, wages into better living conditions and just a better place to live in this community as compared to the state,” he said.
One of the challenges for Solano County noted by Eyler included available labor in the wake of rising construction costs.
“Will we see, of the homes that are in the pipeline, actually get started in earnest and will that alleviate some of the cost that might be slowing down the ability to do really strong economic development because the cost of living is slowly rising?” he asked.
Opportunities included infrastructure expansion and developing a workforce for high school seniors and elder adults.
“We do not want to get caught in a trap where we’re basically generating service jobs only,” Eyler said. “The U.S. and California are kind of at that precipice now.”