Why we should be happy/sad

The economy is improving, no doubt about that, but much of the improvement is based on government infusions that will one day disappear. Chris Thornberg, speaking at forecast breakfast this morning put on by his consulting firm, Beacon Economics, says that the rest of the year will be solid, but look out for 2011 and 2012 when the federal stimulus packages begin to phase out and deficits start exploding. By 2013, the economy should be on better footing (everybody needs to be patient), though he's quick to note that there are lots of imponderables down the road, such as sovereign debt, weak consumer spending, and the possibility of another asset bubble.

Thornberg was joined by Beacon economist Brad Kemp, who offered a decent-but-not-great forecast for L.A. County. The biggest groaner: Double-digit unemployment will be around through the end of 2013. Kemp is also doubtful that consumer spending will be picking up all that much, which means that local governments won't be getting the kinds of tax revenues they really need. Kemp stopped short of predicting a double-dip recession. From the L.A. report:

Los Angeles County is home to some of the most skilled workers in the nation. It is also home to one of the largest populations of low-skilled workers, struggling to find employment in a knowledge-based economy. While manufacturing is likely to do well in the area as the economy recovers, rapid technological changes and capital deepening in the industry implies that this will not translate into many new jobs relative to the size of the economic base - and the jobs that are created will be primarily for higher-skilled workers.