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Economist Bill Watkins believes we are close to a recession

Tuesday, September 20, 2011
Posted September 16, 2011 at 4:15 p.m.
By Michele Willer-Allred

The United States may not be in a recession but is"remarkably close" to one, economist Bill Watkins said Thursday in Oxnard.

"There's been some very disturbing news in the past couple weeks" related to the economy, he said.

He was speaking at California Lutheran University's Graduate School of Education and School of Management's 25th anniversary celebration at its Oxnard campus. The free public event was part of a series of celebrations marking the anniversary.

Watkins, the executive director of CLU's Center for Economic Research and Forecasting, participated in "20 Questions in 20 Minutes on the State of the Economy." Tim Gallagher, president of Gallagher 20/20 Consulting and former publisher of the Ventura County star, asked the questions.

The country could be in a recession because in addition to jobs, productivity has declined in the past three quarters, Watkins said.

Economists are watching the data closely, he said.

"We're remarkably close to (a recession) if we're not," he said.

"It's unfolding slowly, and its probably going to hit in the next 18 months," said Watkins, who added that it could last a long time.

During the next 18 months, the decline of euro and the departure of countries such as Greece and Portugal from the eurozone "will unfortunately cause another financial crisis," he said.

The U.S. and California are poorly prepared to deal with a recession, especially with national unemployment at 9 percent, state joblessness at 12 percent and real estate prices still declining, Watkins said.

"It's just a very difficult time and very unfortunate," he said.

He said increasing legal immigration would help tremendously.

"Immigrants start businesses at a higher rate than American-born. There's more risk-taking. We see foreign students come to (CLU), and they would love to stay. We educate them, and they're the best they have to offer, and then we ship them back home," Watkins said.

A review of business regulations and reduction of the overhead costs for small businesses that could produce jobs would also help, he said. Assembly Bill 32, the "green" jobs initiative, is "killing our economy and California," he said.

"For one thing we're getting it unilaterally. No other state did it. And the result is businesses are leaving," he said.

Watkins said a green economy will not lead the country out of the recession and that health care will continue to be the strongest industry. President Barack Obama's jobs bill falls short because it will continue to run up the debt, and home prices will decline slightly for the next two years, he said.

Watkins also recommended businesses, especially small ones that have been hit hard and are so important for the economy, use this time to prepare for an eventual economic recovery.

"You got to get lean; you got to get mean. You got to be smarter and let the other guy move to Texas," he said.

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