The Recovery Guessing Game

Now that the baseball season is upon us again, it’s time to dust off one of my favorite questions from real estate conferences gone by. The question goes like this: “If the economy were a baseball game, what inning would we be in right now in terms of a recovery?”

Moderators like to ask that question, or some variation of it, to spark their panelists into a discussion.

My observation is that panelists generally seem to fall within an inning or two of each other in their estimates, especially when we are clearly on the road to a recovery, although it’s sometimes surprising how far apart they are. In general, the earlier we are in a recovery, the farther apart the guesses seem to be. Once the economy is up and humming, the estimates seem to grow closer. Once the economy is really roaring along, moderators stop using the baseball question and are more likely to ask: “How much better are things going to get?”

Many if not most of the forecasters usually preface their remarks by saying, “Barring unforeseen events, here’s what I think.” This disclaimer gets them off the hook in case they miss by a mile, but it’s fair, in my mind, because unforeseen events truly can throw us curve balls.

Or, sometimes, a combination of curve balls, sliders, knuckleballs and the occasional 100- mile-per-hour fastball. I am thinking here of the recession of the early 1990s, when Southern California lost about 500,000 jobs. I don’t remember all of the specifics, but I remember economists talking about how Southern California got hit with a quadruple or quintuple whammy that included the national recession, defense industry spending cuts that resulted from the end of the Cold War, the savings and loan industry collapse and the bursting of real estate bubbles in both the residential and commercial segments. And then, just to keep us on our toes, fate threw in the South Central riots, wildfires, floods and the Northridge Earthquake.

Southern California and the nation recovered from all of that, obviously, until something else unexpected came along to throw us off track. The consensus seems to be that the crisis has passed , but moderators are still asking where we are in the recovery, so that tells me that we have a distance to go. Let’s call it the first or second inning, barring unforeseen events. And, another thought: Call me a screwball if you want, but I’m thinking this one might go into extra innings. (credit b. howard, globe st.)

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