Japan and Libya: A Mixture for Economic Disaster? Or not?
With the earthquake in Japan and the events in Libya, people are quaking in their boots. Many fear that the current environment will combine to provide a death-blow to global economic growth. But not everyone thinks so…
In particular, Jason Schenker (a noted energy economist) in his most recent economic post believes otherwise. Jason notes in his most recent commentary that we really need to re-think these events in light of the real problem – the US economy! Specifically, he notes:
“When major risks appear – as they do every year – it is important to answer two questions:
1) Do events change the bias of previous short-term forecasts? In this case, we say: No
2) Do events change our long-term outlook? In this case, we say: No (Except somewhat for natural gas)
In light of recent events, our bullish commodity bias for oil and industrial metals has been strongly reinforced, as has our expectation of solid economic growth rates in 2011 that will decelerate slightly from 2010 rates. In the very long term, we now have a slightly more bullish outlook on natural gas prices, given a likely recoil from nuclear power. All else remains the same.
In the United States, we feel more confident about the employment situation given recent declines in the unemployment rate, but remain very concerned about the U.S. budget deficit, national debt, municipal debt, and entitlements. We are not the only ones concerned about these major issues, however, which is why the dollar was not viewed as a flight to quality during recent Libyan unrest. The greenback may fall further, and sovereign debt concerns remain an almost-forgotten specter in the background. Almost forgotten. Nevertheless, sovereign debt market re-pricing could shake and shred forecasts up and down the Street in a way Libya and Japan have not.”
Jason will be speaking at the next SCRC meeting on April 29-30, and will be sharing many more compelling thoughts on the subject of sustainability and its impact on the energy sector….as well as additional updates on the state of the global economy? To register, please contact us at robert_handfield@ncsu.edu.
