Surely, most Idahoans retain a vivid memory of the recession that crippled the nation just a decade ago.
Surely, folks remember how wild speculation in the housing market and utter malpractice by banks and investment firms left millions of ordinary people fighting to keep food on the table.
Surely, we recall what happens when misplaced optimism runs wild and some massive financial institutions — where greed is everyday business — take advantage of that.
And yet, here we are, watching real estate prices skyrocket in Kootenai County and across the West in general.
On a national level, we’ve seen the stock market rise past an astronomical 26,000 before taking a nosedive.
So there’s a temptation to ask: Are we wise enough and careful enough that we won’t battle our way out of one recession, only to enter another one?
Stefanie Ramirez, an economics professor at the University of Idaho, is watching all these moving parts very carefully.
Overall, she thinks we’re going to avoid another staggering crisis, but...
“I’d say I’m cautiously critical,” Ramirez mused when asked about huge planned housing developments, wild gyrations in the stock market, changes in trade practice with other countries, and so on.
“I don’t mean that to sound pessimistic,” she said. “For instance, it’s easy to say that stock prices — just to use an example — may get overinflated when you consider the actual value of the companies.
“The stock market and a lot of other everyday indicators, however, are based primarily on confidence. And if there is overall confidence running through the economy, then people spend money, jobs are created and so forth.”
But what if that confidence is misplaced?
Ramirez made a fascinating observation related to that: It’s tougher to see the big picture when you live here in the Northwest, because we actually do have all the right economic foundations in place.
RAMIREZ FEELS relatively confident about the nation in general, but she’s seriously bullish on Idaho and the Northwest.
“When you look at a place like Kootenai County,” she said, “house prices are going up for the most fundamental reason of all — supply and demand.
“So maybe you see developers planning more housing, but that’s not wild speculation like we saw (in 2008). Infrastructure like schools and streets and sewers are in place, because people are coming.
“The population is growing organically. There are good jobs and more tech businesses on the horizon. People want to live and raise families here.
“Development isn’t really a gamble (in Kootenai County), because it has a basis in reality — as it does across most of the Northwest.”
The region, obviously, is economically sound.
If homes are expensive, it’s because people want them enough to pay the tab — and they have the money to do it.
Ramirez noted that the crazy home loans we saw in parts of the West during the recession basically have disappeared. Foreclosures have become rare.
But what about the nation, Madam Economist?
“I’m thinking Americans really do remember what went so wrong a decade ago,” she said.
“I trust they’ll remember and avoid the same mistakes.”
Steve Cameron is a columnist for The Press.