A bullish
line of thought
Economic forecasters paint a rosy picture
By Debbie Howlett
Ot lh* Emerald
The recession may soon be just a bad
memory, say local economists and a Portland
stock broker.
“Yes, with absolutely no reserva
tions. . we have reached bottom and are turn
ing up,” says Roy Vanderhoof, a broker with
Dean Witter Reynolds.
And the state labor department agrees,
although its enthusiasm is tempered a bit. “All
signs are pointing to a recovery,” reads a Labor
Trends newsletter from the Eugene employ
merit division and labor bureau. “The euphoria
from (earlier) economic indicators has now
worn off and is being replaced by a more
somber assessment.”
Part of that “somber assessment" in
cludes Oregon. National recovery will come
earlier than recovery in the Pacific Northwest,
says Ed Whitelaw, a University economics pro
fessor. The Pacific Northwest won’t recover
completely — back to the same levels as late
1979 — until late 1985 or early 1986, says
Whitelaw, who is also a past member of the
governor’s economic advisory council.
The statistics in “Labor Trend,” which is
There should be substanial
growth in the Pacific
Northwest for the rest of
the decade and into the
next!'
-Ed Whitelaw
produced by state economists, show Lane
County unemployment figures falling by nearly
one percentage point a month during February
and March. Lane County’s figures have been
some of the nation’s highest. The economists
say the hefty drop in unemployment is an in
dicator that a recovery is underway.
The January to March decline of 2.1
percentage points in the unemployment rate is
the biggest two month drop since the spring of
1976 — at the beginning of the last recovery
from a major recession, according to the
newsletter.
Vanderhoof says the best indicator for the
nation may be the soaring Dow Jones Industrial
figures.
“Looking at the profit picture for corpora
tions a year in advance — things look good.
(The numbers) are not suprising us, and they’re
not disappointing us.”
But if economic recovery sounds like good
news to job hungry students, Whitelaw has a
caveat.
"College students in the '80s are still
worse off than college students in the ’70s,” he
says.
One of the recession’s most important
aspects for job-hunting students is that nearly
3 million of the college graduates in the past
few years are still without work in the fields
related to their studies, Whitelaw says. Added
to that, about 15 million people will be
graduating this year. Whitelaw predicts that on
ly 12 million jobs will be available — for roughly
16-18 million college graduates.
“Students with poorer skills of quan
titative analysis and expression are stuck.. .it
means the shits for them,” Whitelaw says.
Whitelaw says he doesn’t want to rain on
anyone’s parade, but people need to view the
recovery in the proper context.
He advises students to be wary of the
vocational and professional schools because
they "shortcut" necessary areas of learning.
And predicting which job areas will be in de
mand after graduation is a tricky business
because market demands change so rapidly
and education is such a drawn out process.
“Only elephants have longer gestation
period than academics," Whitelaw says. “By
the time enough chemical engineers are train
ed, an overflow comes from the long gestation
period.”
Whitelaw reiterates that a recovery is im
minent but should be taken for the slow pro
cess that it will be. He says the length and
depth will depend on a number of things, name
ly the real rate of interest on mortgages.
"The real rate of interest on home mort
gages won't come down far enough to in
crease housing starts fast enough to pull
Oregon out (of the recession) quickly enough to
satisfy our patience,” Whitelaw says.
According to “Labor Trends,” the real in
terest rates for housing during the boom years
of the late 1970s were in the 10-11 percent
range with inflation running at 10-13 percent.
Now interest rates are 12-13 percent with infla
tion at 4-6 percent. Mortgages are simply less
attractive to the consumer.
Whitelaw asks himself a number of other
questions about the national trend. Is the up
turn strong? Is it just another step in the reces
sion cycle, and will the long term decline in pro
ductivity have been arrested?
“Most of the answers are no,’ therefore it
. V
Graphic by Shawn Bird
is much more disquieting," Whitelaw says.
“It is inevitable that at some point there
will be another economic downturn,"
Vanderhoof says. "Three years from now in
terest rates will re-inflate,” he predicts. But, he
says, the downturn should not be as severe or
as long as the current recession.
The nearly six-year cycle of the recession
is "historically unprecedented,” Whitelaw
says. And he won’t say that what he calls a
“depression” is gone for good.
"I’m more interested in the employment
rate, especially for Oregon,” says Whitelaw. “If
recovery means decreasing unemployment to 9
percent, the recovery won’t reach Oregon until
late 1985."'
"Lumber and wood products are still real
important to Oregon," Whitelaw says. He urges
Oregon to “hedge its economic bets” through
diversification and education.
Part of the blame for the recession, which
Whitelaw readily hands to Oregon’s business
people and educators, also is part of the
solution.
"We need to pay attention to the
managerial and entrepreneurial skills we bring
to the private market. Managerial in
competence is the biggest single explanation
of business failure and slow growth,” Whitelaw
says. “We need to train leaders better and de
mand more from them.”
Whitelaw also points to maintaining and
improving public facilities to insure a lasting
recovery. "What we do is allow it to rot,” says
Whitelaw.
Vanderhoof blames the length of the
recession cycle on the Reagan Administration.
"(Paul) Volcker, (Pres. Ronald) Reagan and
(Donald) Regan have it set up that way.”
Vanderhoof adds that the slow recovery was
more an economic philosophy to lower interest
rates and keep them at a fairly constant level.
He adds that if the plan works, interest rates
could stay at present levels or lower for two or
more years.
If part of the national solution is patience,
Whitelaw has none for the University, which he
says could play a major role in the economic
remedy.
“They don’t require of students the kinds
of things they need in the coming market. The
skills that pay off 5-10-20 years out,” Whitelaw
says.
But Whitelaw’s final analysis for the
economy is optimistic.
"There should be substantial growth in the
Pacific Northwest for the rest of the decade
and into the next.”
Vanderhoof is just as optimistic about the
national picture.
“The building material is there for sustain
ed economic growth, that’s why we’re seeing
the highs on the Dow Jones," Vanderhoof says.
"Really there’s no reason to be pessimistic."
^taelk W@®k’83 FINALE
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