Not irrational exuberance, but enthusiastic caution

ORLANDO, FL. Attendees at the annual Automated Imaging Association Business Conference got an overwhelmingly enthusiastic admonition to be cautions as they negotiate emergence from the economic recession. That was the word from economist Chris Thornberg of Beacon Economics yesterday morning as he addressed AIA members as well as attendees of the collocated Robotics Industry Forum and Motion Control Association Business Conference. Is the bounce sustainable? That’s the question Thornberg posed at his kickoff address to a joint session of the three meetings. Attributing the recession not to failure of credit markets but rather to housing and national asset bubbles as well as consumers acting like college students with dad’s credit card, he said the good news is that the recession is over, but the bad news is that the underlying problems aren’t fixed. That, he said, could lead to a double-dip recession with the next dip occurring in 2011.

He cited problems in his home state of California, but warned that cyclical problems not be confused with structural ones. California’s problems are often attributed to a dysfunctional state government and electorate, but he said that these entities are no more dysfunctional now than they were during the state’s periods of prosperity.

On the national level, he cited sighs of strength: labor markets are no longer in freefall, and the manufacturing sector is showing signs of recovery. But, he questioned, will the recovery be a V, a U, a W, an L, or even an inverted square-root symbol? That, he suggested, depends on what politicians do, and he’s not hopeful they will do the right thing. He cited a couple of examples of wrong things they have been doing related to health care. Emphasizing that he holds both parties in equal disregard, he criticized Republicans for raising the specter of death panels, and he criticized Democrats from backing away from reasonable recommendations for curtailing some routing cancer screening.

Thornberg is a dynamic, compelling speaker. I just wish he had had a more positive message to deliver.