Fall 2011

Digging in the Data

Business Leaders Benefit While Professor and Students Explore Principles of Economics

I’ve had the privilege of working with fantastic undergraduate students on applied research projects, and our work gets noticed.

I WAS HAPPY TO hear that one of my students who had just graduated was rolling through Chicago and wanted to meet me for dinner and introduce me to his fiancée. I was at the University of Chicago on sabbatical in 2005 and Soren and I had just finished a paper titled “Is There a Housing Bubble in Humboldt County?” A few months earlier, he was busy looking through old records to get historical housing prices and rents. In that paper, we found that housing prices in Humboldt County were not sustainable given market fundamentals, and that if the bubble popped, a severe reduction in prices may result.

In March 2006 the Humboldt housing market peaked, and today inflation adjusted prices are over 40 percent lower. Humboldt County’s housing market experienced the same boom and bust as other areas of the country. We also experienced the same deep recession as the rest of the nation. While many local people speak of how different things are behind the “redwood curtain,” my students and I know better.

I’ve had the privilege of working with fantastic undergraduate students on applied research projects, and our work gets noticed. One student and I published a paper on the local gasoline market. A couple of years ago, as housing markets collapsed, students and I created a new real estate webpage and our site was in the top 10 Google searches for “real estate economics.” Two other students collected historical foreclosure data from the county and showed that local foreclosures are at record levels just as foreclosures nationally are at record levels.

Many student projects are with the Humboldt Economic Index. The index was created 15 years ago by economics faculty at Humboldt State because they saw a lack of current business indicators for our remote, rural region. Today, business boards, real estate agents, marketers and economic development agencies use the index to determine where our economy stands—and where it might be headed.

We’ve had a number of students work on the index over the years. The student assistant analyst is in contact with businesses and agencies and compiles the index. The student assistant editor writes the index each month and tells readers how our local economy compares with state and national conditions. While reporters come to me for economic insight, I always remind them that the index is produced by students.

At this year’s commencement, an outgoing index student assistant told me how happy he was to come to HSU to study economics and that he couldn’t imagine getting the same experience anywhere else. I could see how sincere he was in his appreciation for his education. Many students are very excited by their research. This past semester I worked with students to begin to form a new measure of marijuana production in the county. That project is critically important for Humboldt County and I’m proud of the work that they’ve done.

I tell my friends, many of whom are faculty at other colleges, how thrilled I am to be working with Humboldt State students. I simply cannot believe the level of maturity that is exhibited by them (a level that is far greater than I had at their age!). Humboldt State is an ideal place for faculty to work. I can push my undergraduate students hard and they usually step up to the challenge. I’ve spoken with many HSU faculty and what I hear over and over is that they came here because of the fantastic quality of students and the liberal arts environment.

So where is the Humboldt economy headed? Predictions are difficult to make, but I’ll give two scenarios. It seems more likely to me that we are “near” the bottom. Housing prices will stop falling within two years and unemployment rates will begin a noticeable drop. Another possibility is that we “double dip,” which means that we enter another recession and unemployment begins to rise. Two unique factors that influence the Humboldt economy are government finances, since a large portion of our workforce is employed by the government, and the legal status of marijuana production.

Next year, my students and I will begin tracking manufacturing in the county and we will have results from our new entrepreneur survey. I’m looking forward to a great year!