Economist voices cautious optimism for recovery

Two of the financial minds of City National Bank expressed cautious optimism for a slow-and-steady economy at a luncheon with the bank's current and prospective clients Thursday.

Perry Wong, senior economist with City National Bank, explained the economic story line with four bullet points:

• Weaker-than-expected fundamentals of recovery with fluctuating unemployment claims;

• The "wild cards" of consumer and government debt management;

• The indecision of the U.S. government as highlighted by the debt ceiling showdown;

• And the ups and downs of August's economic indicators.

"Ultimately, these two words describe this: Risk and uncertainty," he said.

During Wong's presentation at Genoa Lakes Golf Club & Resort, and in a question-and-answer session afterward, he highlighted how uncertain the future really is with an anecdote about Apple Inc.: The company is sitting on several billion dollars in cash, a typically poor move for corporations.

"It's a big cost to a company to hold onto that amount of money because they get nothing for it," Wong said. "It does nothing for their future."

Paul Single, director of investments for the bank, echoed Wong's optimism for recovery. He said some of the more recent stall of growth was attributable to "small events" that rolled into a more solid stall.

The "Arab Spring" movement and unrest in the Mideast caused a spike in oil prices, and the Japanese earthquake and tsunami took a link out of the international supply chain. Topping it off was the U.S. debt ceiling debate at the federal level, which cut deeply into consumer confidence.

And at the root of it all was the financial crisis of 2007. He said that recessions caused by financial crises typically require a longer recovery than other kinds of recessions and that we won't crawl out of this one anytime soon - or any way but slowly.

"It is a crisis in confidence," he said.

Wong said he is seeing slight signs of life: The leisure-and-hospitality industry in Reno has started to pick up, even if other sectors haven't. And the region's population drain has slowed, which is part of the reason he thinks Northern Nevada is starting to see a turnaround.

"When we see a positive direction, to me that is a cause for celebration," he said.