“We have a rally, a real one with legs. The crisis is over, it took a long time and was painful, but we believe the crisis is over.”
That bold statement came from David Young, CFA, founder and CEO of Anfield Group, LLC, a financial consulting and investment advisory firm, during the “Economic Forecast for 2014” breakfast presented by the Newport Beach Chamber of Commerce Wednesday morning at The Newport Beach Marriott Hotel & Spa.
Young was one of three speakers at the breakfast, attended by nearly 250 local business leaders, who shared their thoughts and insights into what the U.S., state and local economies would look like in 2014.
Robert Dye, Ph.D, Senior Vice President and Chief Economist for Comerica Bank, began his talk, entitled “Emerging from the shadow of the great recession: Insipient normalcy and the new abnormal,” by stating “my job is to cheer you up.”
He noted that the country appeared to be in a virtuous economic cycle, with prices coming up, equity being generated, and housing and auto sales up. However, he added that with the sequester, government shutdown and the deficit, we were still in the early days of recovery.
“The good news is that the economy is responding positively, and confidence is up,” he added.
The second speaker, Dan Walters, political columnist for the Sacramento Bee, suggested that the best word to describe the state’s economic outlook is “uncertainty.”
“The reality is that things were never quite so bad, but it’s also not come roaring back. The realty is somewhere in the middle,” he said. “We were in the worst recession, which had a ripple effect, but California has begun to recover economically. Unemployment is down, there is a renewed housing market, but we have to take that with a grain of salt because we still have unemployment problems. We lost 1.4 million jobs during the recession, we’ve gotten back about half of those jobs. Our unemployment is still higher than the national average, so we have not come all the way back. This is very uneven for a recovery. It’s a very strong recovery in certain areas of the state, but high recession in other areas.”
The final speaker, David Young, showed a chart with overall positive market returns in 2012 and 2013.
“We have a lot of green arrows pointing up, not much pointing down, so this is a real rally,” he explained.
“Our economy is doing better, but then Orange County and Newport Beach always seems to do better than the state,” said Chamber President and CEO Steve Rosansky after the breakfast. “We don’t have a lot of new home construction in Newport Beach, but I heard that the resale market is still strong, people are buying homes and they feel good about themselves.”
Rosansky stated that although the government shutdown is over, it would still have a short term effect on the local economy, although he noted that “we don’t have large government contracts, no national parks, so it affected us somewhat less. Newport Beach is more service oriented, not much large manufacturing, it’s more tourism driven. The hotel industry is doing well, some are having record years, occupancy levels are way up, revenue per available room is way up, not many storefront vacancies any more, new businesses are coming in including PIMCO.”
“One thing about the recession—property values actually increased in Newport Beach,” he added. “Other cities saw huge declines, but even in the worst of times people were paying to live in our community. We have good infrastructure, great schools, and of course a dedicated chamber of commerce.”
