In the November/December issue of Texas CEO magazine, Dean Homer Erekson (Neeley School of Business) writes about the economic outlook for 2012 in an article titled, “On The Path to Recover or in the Irons?” The title references sailing straight into the eye of the wind, which puts it at a dead stop. This is called putting the boat in the irons. Dean Erekson looks at the ways the headwinds affect the economy and how business, organizations, government and people can adjust their sails to reach their destinations.

Dean Erekson looks at the fundamental problems facing the economy – housing and financial crises, government debt, European debt crisis, and natural disasters – and how they strain the ability of the global economy to meet basic resource supplies.

He states reasons for optimism while pointing out challenges that remain. Here are some excerpts:

“There are recent signs of optimism for the economy. In contrast to August 2011 when unemployment rates increased in 26 states, unemployment rates in September increased in only 14 states with 25 states having a decline in rates. Texas continued to be a leader with over 15,000 jobs created in September, second best in the nation. Claims for unemployment insurance also declined in mid-October “

An even more significant challenge in addressing unemployment in the long run is matching employment opportunities to the skill set of those seeking employment.

“During this period of recession and modest recovery, portfolio volatility has become a seeming norm with investor resolve challenged by a near 14 percent decline in the S&P 500 during the third quarter. A commonly cited argument is that uncertainty in the business environment results in companies being unwilling to invest their cash to create new jobs.”

“One might argue that the headwinds for the economy are rooted in economic uncertainty. That is, companies may wait for more stable times before hiring or making investments, thus by itself delaying a more robust recovery. Will steering the economy into these uncertain and volatile winds result in the economy being locked ‘In the Irons’?”

The Dean’s advice for steering ahead includes separating long-run and short-run perspectives. He predicts slow growth, with little change in unemployment, but low levels of inflation.

Read the entire article here: http://texasceomagazine.com/features/the-economy-in-2012/