Uncertainties weigh on recovery from recession

YAKIMA - The recession may technically be over, but recovery is slow and uncertain.

That's according to Lance Carey, an economist with the state's Economic and Revenue Forecast Council in Olympia.

Carey made his comments during an economic symposium held late last week on YVCC's Yakima campus.

"Economic recovery is underway but will take years," Carey said Thursday. "Uncertainty remains high and there are risks."

The risks to local, state and national recoveries include fiscal concerns overseas.

Carey notes that five European countries are at risk of default. "There's real potential for Greece to leave the Euro (currency) and that would lead to panic in Spain and Italy."

Carey adds, "A European banking crisis will be a U.S. banking crisis."

Of more concern for the Yakima Valley and state in general is the impact of Europe's woes on Asia, which is a significant trading partner with the Pacific Northwest.

China, for example, is the fourth leading importer of Washington apples and most of those are grown right here in Yakima County.

"Europe has contributed to a slowdown in Asia, especially in China." Carey says. "A hard landing in China would be particularly worrisome for Washington. It could be a drag on our recovery."

Closer to home, gridlock in Washington D.C. is a concern.

The stalemate on Capitol Hill over extending Bush-era tax cuts that expire at the end of 2012 has been dubbed a "fiscal cliff." If lawmakers don't find a compromise the economy will suffer further, he said.

"Sharp tax increases and spending decreases will cause a recession in the first half of 2013 if the tax cuts are not kept," said Carey.

That assessment was shared by Michael Broadhead, president of Central Valley Bank.

He said there is a risk for interest rates to rise if the economy is allowed to further falter. Banking in the Yakima Valley is healthy now, with money available for loans even if lending requirements have tightened, Broadhead said.

But the economy here and across the nation could take a downturn if Congress doesn't act.

"The looming fiscal cliff scares me the most," Broadhead told the 100 or so people in attendance at the symposium. "They (lawmakers) need to consider the good of the country, not the good of their party."


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