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Long term? I'm worried about our economists

So what worries you most? In the short term? Right off the cuff, I can think of three topics.

By Robert Trigaux, Times Business Editor
Published August 27, 2007

So what worries you most? In the short term?

Right off the cuff, I can think of three topics. Trying to do good work in trying times for newspapers. Trying to make proper time for my family. And deciding if the Rays are still worth my loyalty as a fan.

That's the thing about "short-term" worries. They're not all earthshakers.

Now the tougher question: What worries you most in the long term?

I worry about a loss of direction in this country. I worry how the next generation will cope in a crowded world that's more Darwinian, economically and politically. I worry about staying healthy to enjoy a future retirement and not burden my wife.

These are essentially the same two questions put to 258 economists, members of the National Association of Business Economics, this month. Their latest responses appear in a report to be made public today.

Short term, what are the greatest risks to the U.S. economy?

In the latest survey, the top three short-term threats by percentages are subprime lending and debt 32 percent; defense/terrorism (20 percent); and energy prices (13 percent). One lesser concern that's on the rise in recent years: employment. As in finding and keeping a decent-paying job, not necessarily in that order.

Three short-term risks of note in 2005 that have since declined dramatically on the economists' radar: energy prices (still high but less pressing), government spending/deficit and the current account deficit (put simply, why do we import so much more than we export?).

If the pecking order of short-term economic risks fluctuates a lot, long-term risks seem to be far more consistent.

Top of the long-term concerns: Health care costs, cited by 24 percent. Health care's been the No. 1 long-term risk in four of the past five NABE surveys.

A close second long-term threat: our aging population and the lack of younger people to support them, cited by 21 percent. And third, slipping a bit in importance since 2005, is education and skilled labor, named by 17 percent of those polled.

The survey touched on some economic hot buttons, and revealed some startling weaknesses acknowledged by our nation's economists.

First, most surveyed expect housing prices to stay pretty flat for a while. But 41 percent expect prices to rise over the next five years while 16 percent say prices will fall.

Second - and here may lie the biggest scare - while those surveyed may hold advanced degrees in economics and other business-related disciplines, a stunningly high percentage admitted they had little or no familiarity with the workings of and risks associated with hedge funds (45 percent), private-equity funds (40 percent), asset-backed securitization (48 percent and, by the way, it just happens to be the core mechanism behind how our home mortgage system works these days), credit default swaps (CDS, 68 percent - well you got me on that one, too) and collateralized debt obligations (CDOs, 51).

Hey, if so many of these economy hot shots are struggling in the darkness on this financial alchemy, what chance is there for the rest of us to find the light?

Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

[Last modified August 24, 2007, 22:09:48]