Christie, Economy

Eighty Years Ago Today

Panic on Wall Street“Black Tuesday” Marked Slide Into Great Depression

There is some modestly good economic news this morning in contrast to this day 80 years ago when crowds gathered on Wall Street in New York sensing the economic worst had happened.

Third quarter GNP growth was at a healthy 3.5% indicating to some that the recession is definitely over and, according to the Washington Post, the stimulus efforts are having the desired impact.

Predicting the economy is, however, somewhat akin to predicting post-season baseball performance. I figured Phillies’ lefthander Cliff Lee would pitch a strong World Series opener last night, but hardly expected him to dominate the fearsome Yankee line-up. On a cold, rainy night in the Bronx, Cliff Lee was simply splendid and his one nine inning performance may – no firm prediction – have reset the Series.

So, in case you are tempted to assume an attitude of irrational exuberance over the apparently improving economic numbers, consider the following quote from the very smart financier Bernard Baruch. By 1900, at age 30, Baruch had a sterling Wall Street reputation and a million bucks – a lot of money back in the day.

Two weeks after “Black Tuesday” in 1929, Baruch consoled his friend Winston Churchill with an encouraging note. The future British Prime Minister had taken a bath in the market meltdown and Baruch, counselor to presidents and prime ministers, wrote in a cablegram to Churchill: “Financial storm definitely passed.”

That was November 15, 1929.

So much for predictions. The Great Depression would last another decade. My fearless prediction: recovery to continue, slow and steady, but don’t bet on it.

Cenarrusa, Christie, Economy, Idaho

A Long, Slow Recovery

Idaho Struggles to Regain Economic Footing

Years ago when Idaho’s economy was built around timber, mining and agriculture, the state tended to come late to a recession and leave early. No more apparently.

At the annual Idaho housing conference, organized by the Idaho Housing and Finance Association, the state’s top economist, Mike Ferguson, predicted an agonizingly slow recovery in Idaho. Ferguson opining that it could be a year from now before the Idaho economy really starts to feel like it is growing even modestly.

Other participants in a panel on issues and trends in Idaho – Bob Uhlenkott and Randy Schroll of the Idaho departments of Labor and Commerce, respectively, and health insurance industry watcher Elwood Cleaver – generally agreed. Slow recovery is the expectation and unemployment could go higher. Idaho’s current unemployment rates slumps at 8.9%.

Brad Carlson at the Idaho Business Review has another estimate of the not exactly gloomy, but still very measured outlook.

Ferguson, the long-time state economist, made a telling point when he said that Idaho’s economy has suffered more than might once have been the case during the current downturn thanks to Micron downsizing in the high tech sector, Albertson’s (now Supervalu) headquarters departure from Boise and the demise of the much touted, but now bankrupt resort at Tamarack.

The increased diversification of the Idaho economy since the 1970’s has been a good thing, but at the cost perhaps of having the state’s economy behave more like the rest of the nation when a slide begins.

Always looking for a silver lining, I would note one minor growth area in the Idaho economy. The No. 1 Idaho wolf tag has sold to a North Carolina bidder for $8,000. I wonder, does that qualify as foreign investment?