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Pete Bellas: What’s the forecast?

Posted: February 5, 2014 2:00 a.m.
Updated: February 5, 2014 2:00 a.m.

 

What is our fascination with forecasts? Are they really helpful and how can we use them for planning purposes?

Certainly if we are planning an outdoor event next weekend we would at least look at an extended weather forecast. If we are planning a vacation far in the future we would use aggregate data to determine the probability of having appropriate weather at the time we would travel.

Thankfully economic systems are more predictable and behave somewhat more rationally (barring catastrophic events) than the weather. This is why at the beginning of every year we look for economic and business forecasts.

The process of forecasting is quite complex. Analysts typically start by developing moderately detailed models for each of California’s economic regions. These individual models are combined to create an aggregate forecast and then “disassembled” into detailed local forecasts for each community using probability theory by which predictable events and random elements are reconciled.

Groups like the California Economic Forecast have spent decades refining their model for the California regions and are well respected for their thoughtful and accurate data.

With the economy is finally looking better this might be the right time to start some new business initiatives.

Economic forecasts can help you decide if the timing is right and refine what direction those initiatives should take.

Developers, cities and economic development agencies are very interested in retail and industrial space data.

They need to know how much is currently available and when more space is coming on line. When combined with data about expansion and attraction of specific industry clusters, developers and planners can determine where to best deploy their resources.

Expanding industry is also important information for realtors as it drives the demand for housing. They also pay close attention to housing starts, foreclosure rates and shadow inventory. Knowing the true inventory and market for housing is crucial for advising their clients.

Retailers look to the forecast for changes in consumer confidence, discretionary income and spending patterns.

Managing inventories and strategic decisions on product mix are critical to their success.

Potential entrepreneurs can use the data to decide if this is the right time to launch a business that they have in the planning stage or may inspire some to take new business directions.

Employment and job growth affect every aspect of the economy. Job growth will affect confidence and spending, both retail and housing. Industry specific job growth is useful data for planning and business attraction.

All in all a forecast can help you refine your business plans for the year, help you allocate resources and give you confidence that you and your business are moving in the right direction.

College of the Canyons, partnering with the Santa Clarita Valley Economic Development Corporation, is sponsoring the 2014 Economic and Real Estate Outlook conference on Thursday, March 6. The conference is at the

Hyatt from 2pm to 5pm followed by a networking cocktail reception. You can get more information or register for the conference at www.scvedc.org/outlook.

Wouldn’t it be worth a few hours of your time to get an up to date outlook on the local economy for the coming year?

Pete Bellas is the COC Dean of Economic Development at College of the Canyons. His column reflects his own views and not necessarily those of The Signal. For more information about the College of the Canyons Economic Development Division, call (661) 362-3521 or visit www.canyonsecondev.org.

 

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