Notes from the CEO
On Track to Get Back On Track? Maybe.
I had the pleasure of attending the Sacramento Business Review’s 2012 Economic Forecast event earlier this week. Business, academic, and civic leaders from throughout the region gathered and eagerly anticipated hearing what has become the preeminent and most comprehensive annual economic forecast in our region.
The big take away: we’re certianly ready for recovery. But where are we in that process? We’ve hit bottom and there is nowhere to go but up. Some say it’s already happening. Encouraging news but it was with cautious optimism that the speakers offered this information and it was in the same state of mind that the audience took it in.
Highlights from the forecast included:
- An expected drop in unemployment
- A tougher year in terms of profitability for banks
- A continued rocky road for residential and commercial real estate.
- Better access to credit for small businesses
- Possible stabilization for the local economy
This does not paint the rosiest of pictures but I have to say it was an improvement upon the outlook of recent years past.
In this video courtesy of Sacramento State’s YouTube Channel, Dr. Sanjay Varshney, Professor of Finance and Dean of the College of Business Administration at CSU, Sacramento and chief economist for the Sacramento Business Review, surmises that the outlook presented in the 2012 Economic Forecast hinges on two factors: the government sector and real estate.
It’s true that we are still very much a government town and every time the wind blows in that sector we feel the ripples throughout our community arguably more than anywhere else in the State.
As far as real estate goes, I agree that we are still in real trouble. The commercial real estate market is still in a huge hole that, while progress is being made, will be tough to dig out of. There are also more tough times ahead in the residential real estate market.
The most encouraging part of the report was the small business data. According to a recent small business study, confidence is up among small business owners about access to credit, as well as credit conditions and the economy in general.
Interestingly, Dr. Varshney ends his video clip by saying that these very early signs of the local economy getting back on track may not continue nor be consistent. I believe that’s a word to the wise for all of us.
James E. Beckwith
President & CEO
Five Star Bank