EconoMeter | 2011
December 31, 2011 – Will economy improve in 2012?
SDUT’s Question: Will the U.S. be better off by Election Day, Nov. 6, 2012, than it is today?
Gary London’s Answer: Yes. Even now the economy seems to be responding well to spotty and temporal upturns in consumer spending. A couple of things seem to be at play. We are well entrenched still in our “Crisis of Confidence” especially in our disdain of all things D.C. Nevertheless most numbers have and will continue to improve and the broader base recovery seems to have caught its footing….. Read the Article Here
December 24, 2011 – What surprised economists the most in 2011?
SDUT’s Question: Did you have a major professional accomplishment in 2011? What surprised you most about the economy this year?
Gary London’s Answer: Yes. We have taken the distress of the economy and turned it into opportunity by expanding our firm, in terms of both people and services, in preparation for the recovery. Perhaps it was not so much “surprise” as amazement that our nation’s leaders have quibbled to such an extent that they may now be the cause for the languishing economy…. Read the Article Here
December 17, 2011 – Do presidents matter in the economy?
SDUT’s Question: Can any president, regardless of party, greatly change the course of the economy?
Gary London’s Answer: Yes. Our presidents who have created the best environment for business (FDR, JFK and WJC) and had a positive outlook on the economy and, as a result, have had the greatest success in improving the economy. Those presidents had the inner spirit and personal strength to give the people confidence… Read the Article Here
December 11, 2011 – Will exports create more jobs?
SDUT’s Question: With U.S. exports on a healthy growth curve, will San Diego share in the upswing and can we expect more jobs as a result?
Gary London’s Answer: Yes. Our region will benefit from our strategic proximity to Pacific Rim markets, particularly China, which are sitting on trillions of our dollars which they can spend here on a par basis, particularly through our scientific exports. Our neighbor Mexico is our manufacturing hub, and our region participates in their upswing with jobs and capital… Read the Article Here
December 4, 2011 – Holiday sales – a sign of good times?
SDUT’s Question: Are the early positive signs of increased holiday spending signs for an upswing in the economy for 2012?
Gary London’s Answer: Yes. Particularly because consumer spending is the dominant part of our GDP. The upswing may very well suggest that we have crossed the psychological divide from pessimism to optimism. Or, it may more modestly represent that we have run out of things and consumers are striking now while there are bargains in the stores. There was a lot of noise about grab the bargains “while supplies last” since retailers will not carry large inventories to dump or discount after Christmas… Read the Article Here
November 26, 2011 – Who is thankful for what in this economy?
SDUT’s Question: Can we be thankful for something going right in the economy this Thanksgiving weekend?
Gary London’s Answer: Yes. We can be thankful that it is not last Thanksgiving. We can be very thankful that the basic “bones” of our economy are so strong that even a compromised President and destructive Congress can’t destroy it. While over the past year we have progressed slowly in economic recovery, the mid- and long term future is bright… Read the Article Here
November 19, 2011 – Should mortgage interest deduction be eliminated
SDUT’s Question: Is reducing or eliminating the mortgage interest deduction a good way to cut the federal deficit?
Gary London’s Answer: No. I view this proposal as a non-starter. In addition to the fact that it would be extremely unpopular politically, the bigger problem is that there are now three generations of American homeowners accustomed to this deduction, which represents the backbone of America’s home financing system. If the deduction were eliminated, it could have the impact of further eroding home values because it is the deductibility that contributes to value elasticity (translated –people can afford more if they are able to deduct the interest on a home mortgage)… Read the Article Here
November 12, 2011 – Will holiday consumers spend more?
SDUT’s Question: Are San Diego consumers in a better buying mood this coming holiday season than they were in 2010?
Gary London’s Answer: Yes. It might even be a bit better as more consumers are easing into their “new normal.” While the disposable income iscertainly not appreciably higher, nevertheless, consumers are running out of stuff and need to replace it. The very recipe for recovery is increased demand for goods and services. I think the news will be in what is purchased… Read the Article Here
November 5, 2011 – Is a flat tax folly or foolproof?
SDUT’s Question: Is a federal flat tax a good alternative to the current progressive income tax system?
Gary London’s Answer: Yes. But only in the sense that any refinement to the tax system which simplifies it must be good. Simplification can also be accomplished with a valued added tax (VAT) because consumption is largely a choice (exceptions being your house, food, education and transportation). A flat tax puts a disproportionate burden on the lower income earners at the very moment when many are struggling… Read the Article Here
October 28, 2011 – Should banks follow Obama’s mortgage refi plan?
SDUT’s Question: Should mortgage lenders adopt the president’s new refinancing plan to help ‘underwater’ homeowners?
Gary London’s Answer: Yes. The quicker debt is rebalanced, the sooner banks will lend again, be back in business and stimulate the economy. Because these are loans backed by Freddie and Fannie, the impact could be sizable… Read the Article Here
October 22, 2011 – EconoMeter confronts Wall Street occupiers
SDUT’s Question: Are the Occupy Wall Street activists correct that the economy benefits 1 percent of Americans to the detriment of everyone else?
Gary London’s Answer: No. The top 1 percent earn more than $380,000 annually. Most making far less do not feel that the one percenters are detrimental to them. The one percenters are an amalgamation of job creators and job destroyers. Yet they — along with the next 20 percenters — pay most of the taxes that fund our government. .. Read the Article Here
October 8, 2011 – EconoMeter Panelists dissect the almighty dollar
SDUT’s Question: Would the U.S. economy benefit from a falling value internationally of the U.S. dollar?
Gary London’s Answer: Yes. The dollar has been falling. If it hadn’t – or if we had enacted measures to prop up the dollar, the economy would have suffered even more. The obvious answer is that it makes U.S. exports cheaper. This is what the Senate is trying to accomplish by enacting a bill that addresses China’s currency manipulation… Read the Article Here
October 1, 2011 – Is Fed out of tools to boost the economy?
SDUT’s Question: Is there more the Federal Reserve can do to spur economic growth?
Gary London’s Answer: No. The Fed has used most of the ammunition in its arsenal to stimulate the economy by impacting lower interest rates. Now there is very little more that they can do except to suggest policy changes. The economic numbers overall are getting better… Read the Article Here
September 24, 2011 – Should millionaires be taxed more?
SDUT’s Question: Is President Obama’s proposal to raise taxes on millionaires and billionaires good public policy?
Gary London’s Answer: No. It is indifferent public policy. Neither tax breaks nor tax increases will solve any current economic problems –we will not find our path to economic prosperity through the tax code in either direction. Tax breaks to million- or billionaires are only a small dent… Read the Article Here
September 17, 2011 – Infrastructure: A star player in the jobs bill?
SDUT’s Question: Is the $90 billion devoted to infrastructure in President Obama’s $447 billion jobs bill a good approach to boosting construction employment, and if so, what should the San Diego region spend its share on?
Gary London’s Answer: No. Quick Government programs for jump-starting the economy through job creation is what we need, but beware that these programs can be bungled if implemented too quickly. Military spending alone between 2009 and 2014 in the San Diego region will account for more than $4 billion in economic stimulus to build hospitals, housing and infrastructure… Read the Article Here
September 10, 2011 – What’s the economic legacy of 9/11?
SDUT’s Question: Are our economic problems today attributable in some way to the measures taken after the Sept. 11, 2001, attacks?
Gary London’s Answer: Yes. However, even with the billions spent in Iraq and Afghanistan, ultimately the price of preserving freedom is incalculable. The U.S. used debt to finance the 9/11 wars, rather than war bonds (as in World War II). This will burden the debt for decades… Read the Article Here
September 3, 2011 – Labor Day 2011: Are you better off?
SDUT’s Question: Are America’s workers better off on Labor Day this year than 2010?
Gary London’s Answer: Yes. While it is tempting to cite the economic progress that has NOT been made over the past year, the answer is “yes”’ if it is based on unemployment (July 2011 9.1 percent vs. 9.5 percent in July 2010). While the unemployment numbers do not account for labor force participation (including persons who have elected to retire or others who have voluntarily taken themselves out of the workforce), or under-employment, at least the numbers do not suggest that we are worse off… Read the Article Here
August 27, 2011 – Will the troubled euro survive?
SDUT’s Question: Is the euro going to survive as a viable currency given the weakness of the European Union’s economy
Gary London’s Answer: Yes. But It’s a wobbly deal for them. Unlike the United States, where the emphasis on all things political and economic is United, the EU has united only its currency, not its continent. What this is proving is that it is difficult for countries to maintain political autonomy with currency dependence… Read the Article Here
August 20, 2011 – Economists examine their own portfolios
SDUT’s Question: With the stock market in such turmoil, is your personal investment portfolio worth more today than it was on Jan. 1? What advice would you give the rest of us?
Gary London’s Answer: No. But, frankly, I do not care to find out. What matters is that it is worth more than it was 20 years ago. The money is stashed away for retirement, as is the case for most people’s investment portfolios. It is augmented every year, and I know that the odds are well in my favor that over the long term I will have achieved a reasonable level of return… Read the Article Here
August 13, 2011 – Is the U.S. headed back toward recession?
SDUT’s Question: Is the U.S. headed back toward recession?
Gary London’s Answer: No. While we have technically been out of the statistical recession for over a year, we are not out of it in people’s lives. This is more than a recession. This is a structural economic change — emerging jobs are becoming more and more disconnected from people’s skills. Yet the bigger problem currently is that the psychological recession also exists… Read the Article Here
August 5, 2011 – Is lower mortgage interest deduction coming?
SDUT’s Question: Should Congress include a tighter cap on mortgage interest deductions as part of its next phase of budget cutting?
Gary London’s Answer: No. But it really depends on who do we want to hurt and help. The $100 billion in revenue this would purportedly recover for the federal treasury must be weighed against inevitable reductions in property tax revenues which would reduce revenues to local public agencies, particularly the school districts who receive the bulk of property tax revenues. The impact of reducing mortgage reductions to a prospective homeowner is to reduce their purchasing power… Read the Article Here
August 1, 2011 – Should U.S. dump debt ceiling?
SDUT’s Question: Should the United States join the ranks of most other industrialized nations and do away with a debt ceiling?
Gary London’s Answer: No. And we will want to revisit debt limits on or before the year 2025 when entitlements (Social Security and Medicare) and interest payments mostly consume all federal revenues! While I am uncomfortable – as most Americans are — with the way this debate/negotiation is playing out, it’s good that we have these… Read the Article Here
July 23, 2011 – Is GOP budget plan good for the economy?
SDUT’s Question: Is the House Republicans’ “cut, cap and balance” budget and debt plan a good economic approach to the federal government’s fiscal problems?
Gary London’s Answer: No. Like most Americans, I am mad at everyone. I want a deal, not rhetoric. The fact that the adults now all seem to be talking about how much to cut, not whether to cut, is consistent with the direction that I want these talks to go. While I am warm to the cut and accountability approach by Republican congressionals, I think they are talking to themselves too much… Read the Article Here
July 16, 2011 – Are employers getting too used to a lean workforce?
SDUT’s Question: Given the recent, disappointing jobs growth report, do you think many companies are getting too used to a lean permanent workforce and will depend on temporary workers for the foreseeable future?
Gary London’s Answer: Yes. The concept of “lean” mostly explains these lethargic job growth numbers. The growth last month (18,000) was the net of private sector job growth and public sector job loss. This may not be viewed as such a bad thing. Most organizations, whether private or public, have adjusted to the idea of a compressed work force because they have had to. I don’t think it has anything to do with depending on “temporary workers”. Many companies are now learning how to operate through technology or otherwise at higher levels of efficiency… Read the Article Here
July 9, 2011 – Would free-trade deals help San Diego
SDUT’s Question: Should Congress ratify free-trade agreements with South Korea, Colombia and Panama and would California and San Diego benefit?
Gary London’s Answer: Yes. California and San Diego benefit particularly because we have strategic geographic proximity to the Pacific Rim and the Americas. More broadly, the point of protectionism is seldom to protect the vested interests of the nation, but rather to protect certain businesses or labor categories that can no longer compete. This is a particularly vexing problem in today’s economy, as structural changes now taking place are severely impacting certain demographic, geographic and job sectors… Read the Article Here
July 1, 2011 – Should we be tapping our strategic oil reserves?
SDUT’s Question: Do you think President’s Obama’s plan to take 30 million barrels from the nation’s strategic oil reserves to increase petroleum supplies will drive down prices and boost the economy?
Gary London’s Answer: No. What, a two-day supply for America? It’s just a drop in the barrel. Even as a “short term” boosting effort it probablycan’t have much impact. Better to think long term. While heretical, the more logical policy is to drive UP oil prices, perhaps through the taxing system. The cumulative impact would be modified driving behavior, more manufacturing of fuel efficient cars, expansion of alternative fuel sources, domestic exploration, higher public transit ridership and less dependence on foreign sources… Read the Article Here
June 24, 2011 – Why aren’t foreclosures in San Diego higher?
SDUT’s Question: Are you surprised that San Diego County has not seen a big upsurge in defaults and foreclosures so far in 2011?
Gary London’s Answer: No. The apocalyptic peak in foreclosures was 2008 at about 20,000 for the San Diego region. That number has been retreating since, and the year should end at less than 10,000. This is still historically high, but obviously the market is clearing. Nevertheless, notices of trustee sales are still high, indicating stress which translates into such things as “short sales” and pricing discounts… Read the Article Here
June 18, 2011 – What can Obama do to fix the economy?
SDUT’s Question: Are there any new initiatives President Obama should take to get the economy growing faster?
Gary London’s Answer: No. The American and global economies are experiencing agonizing “structural” changes such that certain job sectors are gone or being phased out. That is fundamentally why many corporate profits are up and capital is available, yet hiring is sluggish. The president and Congress should be dealing with the deficit and creating a budget that reduces the deficit… Read the Article Here
June 10, 2011 – Is inflation a threat to economy?
SDUT’s Question: With overall inflation in April at an annual rate of 3.2 percent the highest since October 2008, are you worried that we’re entering a higher inflationary period, due in part to higher gas and energy prices?
Gary London’s Answer: No. Slightly higher inflation might have the impact of kick starting the national economic engine, while the Fed has many tools available to curb inflation if it gets out of hand (albeit at some economic expense). However, it does feel like we already have entered a higher inflationary period. Been to the supermarket lately? Food has inflated… Read the Article Here
June 4, 2011 – Are we facing a double dip in home prices?
SDUT’s Question: Do you expect the apparent double-dip in home prices nationally and locally to continue through the rest of the year?
Gary London’s Answer: No. And this is not a double dip. We are trolling along the bottom statistically where a few percentage point swings in either direction doesn’t mean much. At some point, perhaps in the next reporting period, the numbers will improve. While market values and activity are irrefutably down, this index is still tracking mostly distressed sales, which continue to dominate the market… Read the Article Here
May 28, 2011 – Should grads get advanced degree if they can’t find work?
SDUT’s Question: If I’m a graduating college senior and can’t get a job in my field, should I go on to graduate school this fall? The alternative is getting a job in some other sector in the meantime and at least gaining work experience.
Gary London’s Answer: Yes. A recession is a terrible thing to waste. If you are young, able and willing, entering or staying in school is an excellent use of a down cycle to create or enhance your credentials and skills. The key is to realistically focus your graduate education in those fields that matter and stay away from the vestigial fields of the old economy. However, the economy and job market are slowly improving… Read the Article Here
May 21, 2011 – Is Congress’ debt-ceiling inaction bad for stocks?
SDUT’s Question: Is the stock market or general economy likely to get increasingly unstable the longer Congress waits to deal with the debt ceiling?
Gary London’s Answer: Yes. The longer Congress waits, the more nervous the investment world will get. However, the debt ceiling will be addressed, and any unstableness in the market will be short lived. In some respects it might already be priced into the market… Read the Article Here
May 14, 2011 – Is the “American Dream” of homeownership losing its allure?
SDUT’s Question: With the continuing malaise in San Diego’s housing market, is the “American Dream” of homeownership losing its allure?
Gary London’s Answer: No. One person’s malaise is another person’s opportunity. The dream is even richer for those who choose to take advantage of the distress-burdened, historically low prices on homes currently available. There is no doubt that the homeownership rate climbed too high, a symptom of the “liar loans” and easy qualification of persons who shouldn’t have purchased… Read the Article Here
May 7, 2011 – Does the death of Osama bin Laden pave the way for a more robust economic recovery?
SDUT’s Question: With the death of Osama bin Laden, the hope is that terrorism will fade away, security will be loosened, wars in Iraq andAfghanistan will end and all related expenses will mean a more robust economy. Does the death of Osama bin Laden pave the way for a more robust economic recovery?
Gary London’s Answer: Yes. But not in the way we might initially think. Security will not loosen, it will tighten. There are too many freelance terrorists out there. My perspective mostly leans on “behavioral” economics: the collective global sigh of relief that the hunt is over might very well be reflected in this moment being marked as a turning point in defense spending and in global relations… Read the Article Here