Before Umpqua’s “Navigating 2012,” a Course Check on 2011

Puget Sound Business Journal readers are being invited to Umpqua Bank’s panel discussion on the economy in 2012, held at the Grand Hyatt in Seattle on September 20, 2011. Umpqua Bank CEO Ray Davis will join Arun Raha, chief economist for the state of Washington, and economic consultant Bill Conerly, Ph.D., for a forecast of next year.

That being the case, let’s review how well last year’s event matched up to reality, when the mood was “one of growing impatience–having seen the worst–with the progress of recovery.” It’s unlikely that people would laugh as heartily now at Arun Raha saying, ”What we need now is just a few months of nothing going wrong,” as that’s precisely what didn’t transpire.

Raha, Washington State’s chief economist, just had reason to recount how the disruption of the Japan earthquake has been followed by a summer of wrangling over the emperor’s new debt ceiling, leading to a significant risk of a double-dip recession. Washington State’s unemployment rate continues to hover just above nine percent, and further cuts in state spending should serve to keep it there, if not increase it.

Raha was right, then, to worry about nothing going wrong. He was also correct about Boeing ramping up production, banks remaining under stress to recapitalize under more stringent FDIC regulation, and real estate not bouncing back until at least mid-2011. The gold bubble has yet to pop, interest rates have yet to rise (though any deflationary spiral has been mild), and delayed foreclosures are still depressing market values.

A trade war with China has not materialized, and, all things being equal, I imagine business owners would trade “uncertainty” over healthcare costs for what actually developed, as the stimulus-fed recovery stalled out.

I remember being most impressed with Davis’s delineation of the Catch-22 banks faced: On the one hand they were being told to lend money to get the economy moving, but on the other, they were being required to tie up even more resources as security. The situation hasn’t improved markedly. Due to the market’s volatility of late, HomeStreet Bank’s parent postponed its IPO–an IPO designed primarily to raise about $132 million so that the bank will qualify as “well capitalized,” notes the Seattle Times.