Economists like to use the phrase ceteris paribus all things being equal. As in gas prices are rising with continued unrest in the Middle East, ceteris paribus.
Of course, this ignores other factors that might affect gas prices, such as a recession. It also neglects unforeseen shocks to the economy that buffer markets throughout the year.
And there have been a lot of shocks in the last 12 months: the euro crisis, the Arab Spring, a tsunami in Japan, droughts and fires and a Congress that appears have in rigor mortis. Finish it up with the death of Kim Jong Il.
In this spirit, I present some prognostications about where I believe the local economy is heading this year.
Let me begin by saying the Great Recession hit the local economy pretty hard. Inflation-adjusted incomes in La Plata County fell about $4,000 from 2007 to 2011 but they are looking to rebound in 2012 by about 5 percent likewise in Archuleta and Montezuma counties.
Similarly, I think inflation will moderate this year, though homeowners might be less enthusiastic as returns to housing is about equal to price growth.
Speaking of real estate. I forecast that real La Plata County real estate prices will rise next year and days on the market will shrink, though the specter of foreclosures still clouds the sun, so dont look for a robust rebound.
In the rental market, inflation-adjusted prices have pretty much stagnated but vacancies are down. The former is curious because one might expect rent to rise with the growth of foreclosures in the area about 403 last year, which is not really an improvement from 2008-2010.
Unemployment took a big hit too, rising about 2 percent above pre-recession levels. Recent data suggest the unemployment picture is improving. However, I remain skeptical given the cyclical nature of labor markets. And how many people have dropped out of the labor market anyway and are therefore not counted? Nonetheless, look for the unemployment rate to average about 5.5 percent in 2012.
Tourism is another concern. While airline travel is steadily growing, visitors frequenting the Durango & Silverton Narrow Gauge Railroad and Mesa Verde National Park have fallen from levels a few years ago.
According to an in-house tourism index, 2006 was the areas best year for tourism in the last decade. I think tourism will continue to suffer somewhat especially with the once-in-a-century snowfall were getting these days.
So, ceteris paribus, the year is shaping up to be more of the same. And that is worrying, because we may be stuck in economic limbo, a lost decade or a new norm neither recession nor expansion. But it will feel recession-like for many Americans.
After such an interesting year, I guarantee another plethora of shocks, from La Niña to the rise of another Greece debt crisis to trouble in the Middle East (Syria, Iran or Iraq, lets start a pool). Or will the world end this year as prophesied in the Mayan calendar?
To use another favorite phrase, the news could be good. Im not holding my breath just yet.
email@example.com Robert Tino Sonora is an associate professor of economics at Fort Lewis College and the director of the Office of Business and Economic Research at Fort Lewis College.