On October 7, 2008, the Center for Economic Development and Business Research at Wichita State University released a glowing economic forecast for the near future in Wichita. Events immediately following the release of this report, however, illustrate just how hard it is to forecast economic conditions. When policymakers rely on these reports, bad decisions are the fully predictable result.
The report Wichita’s Economic Outlook: 2008 Review and 2009 Forecast, says “Next year will bring continued job growth in the Wichita market, despite the national economic downturn,” according to reporting in the Wichita Business Journal. But recent articles in the Wichita Eagle with titles such as Cessna warily eyes economy and Hawker Beechcraft plans to lay off 500 paint a different picture.
It’s hard to forecast the economy, and events the past few months have unfolded at an alarmingly fast pace. But the Center for Economic Development and Business Research has produced other research that is problematic. I’ve written about these reports in posts such as Wichita School District Economic Impact and Stretching Figures Strains Credibility.
Incredibly, as I report in WSU Study on Downtown Wichita Arena Not Complete, the former director of this center was not aware of important new government accounting standards when she and her staff prepared the forecasts that were used to justify the downtown Wichita arena in 2004.
The problem is that Wichita and Sedgwick County policymakers use these studies to plan and justify their actions in intervening with our economy. As a result, we often proceed with plans based on unreliable information.