ILWACO - On Tuesday, Oct. 15, a well-attended Rotary breakfast at the Rebecca Inn welcomed guest speaker, Dennis Long, chief executive officer of The Bank of the Pacific. Long addressed the issues of the national and world economy, the state and local economy, local bank safety, and then did some forecasting.
Long discussed the state of the stock market, which since 2000 has declined by nearly $9 trillion. While most of this is a "paper" loss, it has become very real in its effect on IRAs and 401K retirement plans. A good portion of this decline can be attributed to our inflated high-tech environment; high-tech depreciates and disappears rapidly from balance sheets. However, Long noted that because fiscal policies have been initiated, economists and particularly Alan Greenspan believe that a slow recovery is underway.
Long noted that currently unemployment is languishing around 5 to 6 percent nationally. Jobless claims are trending unfavorably and will ultimately result in a higher unemployment rate if left unchecked. Home construction is what's preventing unemployment from pushing toward 7 percent. Keeping long-term interest rates low is very important to sustaining construction spending. Another factor he pointed to is that our strong dollar has made it difficult to market our manufactured goods abroad.
In contrast, Long indicated that retail sales remain ahead of last year. He also noted that industrial spending of a capital nature has been anemic, so the slow recovery is heavily dependent upon continuing low interest rates and an up-tick in industrial spending.
Long commented that the local economy is holding its own. Tourism has been good this year, and he believes Sierra Pacific in Grays Harbor County will help our local forest products' industry. And, he said local banks are performing well. There has been a little asset quality deterioration, but net losses won't be much different than the last two years. In short, he said that the three local banks are in very good shape, and CDs are a safe and sound investment.
Additonally, as far as our local economy is concerned, Long stated, "With interest rates down to the rates of the 1950s and 60s, we should be able to stay strong locally. Real estate rates, and home construction and refinancing is what has kept our local economy out of a deep recession." He concluded that Pacific County is well positioned to move forward.