Speaker Assesses Possible Scenarios Facing Economy At TEDC Luncheon By BRIAN PEARSON, Business Editor   |   Apr 09, 2009

Best-case scenario: Fourth-quarter earnings are favorable, consumer confidence and stock prices rise and the layoffs frenzy ends this year -- with 2010 a mixed bag of joblessness recovery, high inflation and high interest rates.

Worst-case scenario: The federal government continues to stumble, economic crutches prop up bad banks and businesses, unemployment soars above 10 percent and deflation strikes commodities.

These scenarios have bubbled forth in the economic crystal ball of Mark Dotzour, who spoke Wednesday of bad news -- and worse news -- during a 20th anniversary luncheon held to honor the Tyler Economic Development Council.

Dotzour, Texas A&M Research Center chief economist and research director, painted a less-than-rosy picture of federal actions to help the economy, moves he called "printing money."

On a more positive note, Dotzour congratulated the two-decade-old Tyler Economic Development Council for working to diversify the economy, putting it in a sturdier position to withstand the ongoing economic maelstrom.

He said economic recovery nationwide depends heavily on consumer confidence, upon which 71 percent of the economy runs.

"What people in this country need to do is not be afraid," Dotzour said.

What won't be the ultimate solution, he said, is the continued injection of federal dollars, which taxpayers' eventually must repay.

"Our parents never went to the government and said, 'Bail me out,'" Dotzour said. "We're more
than happy to pass it off to the next generation.

"We're not going to have a depression, because our government will print money every day to make sure that doesn't happen. I don't want to see our future go down the drain because we don't want to stomach a recession like our parents and grandparents did."

"The country now runs on an artificial economy based on the government printing money."

He added that it would take 17 million Americans working eight hours every day of the year at $20 an hour to pay back $1 trillion in federal intervention.

"Your government doesn't have a penny it isn't taking from you," Dotzour said.

He went on to paint bleak pictures of corporate profits, which have dwindled to almost nothing, banks and small businesses.

"We may clean up the bank system, (but then) nobody wants to borrow money," he said. "The federal government doesn't have nearly enough money to bail out the banks."

The small-business outlook for now remains negative, he said.

"There are more people who want to fire than they want to hire," he said.

Meanwhile, investors' biggest concerns include possible increases in the capital gains tax, destroyed savings, government control of businesses and rampant speculation on what the government will do next, he said.

As for investing in gold, Dotzour quipped that it might be better to buy a narcotic.

"At least you'll feel good before it kills you," he said, adding that gold prices inevitably will drop.

Wednesday's luncheon was not all sour economic news, though.

Politicians, business representatives and governmental officials gathered to applaud 20 years of Tyler Economic Development Council work.

Ray Hawkins, a former Tyler Junior College president who was involved in the TEDC's creation, noted how far the community had come economically in the past two decades.

Hawkins noted Tyler's economic doldrums during the mid- to late 1980s, when the oil industry crash pushed the community onto the ropes.

Oil dipped to $10 a barrel and unemployment soared to 8.7 percent, he said. The average prices of homes sold went from $74,629 in 1984 to $69,335 only four years later.

"Local banks that had been part of the community for decades began to struggle and were taken over by larger non-local system banks," Hawkins said.

In 1988, community leaders took the first steps to what became the TEDC the next year.

"Over the past 20 years, a lot has changed in Tyler and Smith County," he said. "The economy has become much more diverse and is no longer so heavily tied to the energy sector."

He noted that Smith County's population has grown to 201,277 from 151,309 in 1990. Home values have increased to an average $177,000.

Meanwhile, the TEDC has reached 118 members, compared with the original 20, he said. During the past 20 years, the council has worked on 133 projects that have retained 8,461 jobs and created another 7,368, he said.

The companies involved invested $477.3 million in new plants and equipment and built 3.6 million square feet of facilities.