Beware the black swan: financial meltdown dealt a blow the economy is still trying to shake off.

• Author: Cote, Mike
• Position: 2011 [economic outlook]

If you should encounter a black swan, do not be mesmerized by its elegant, otherworldly beauty, its majestic ominous grace.

Shoot the dang thing, would you?

Just a thought.

"Black Swan Rising" was the theme this year for economist Bill Greiner's 2011 outlook at the ColoradoBiz Top Company trip to Napa Valley in October sponsored by UMB.

Grieiner, president of UMB's Scout Investment Advisors, borrowed the idea from Nassim Nicholas Taleb's 2007 book "The Black Swan." The title refers to unexpected, game-changing events such as the rise of the Nazis in Germany and the 2011 terrorist attacks in the United States. It alludes to the discovery of black swans in Australia by British colonists, shattering the belief that all swans were white.

[ILLUSTRATION OMITTED]

The financial meltdown of 2007 to 2009 qualifies for membership, Greiner says. And such meltdowns may be more than an anomaly, Greiner suggested.

"The frequency of black swan events occurring in the financial markets is accelerating and becoming much more common than was the case for a number of decades," he said. "It leads one to ask the question, why is this happening?"

Back in 2007, Greiner dubbed his economic outlook "The Long, Hard Slog," warning of tough times ahead. But the problems were far deeper than he or anyone else could have expected.

Now that we're living with them, expect a long, slow climb from the muck, not that you didn't already know that. The prediction by economists for this past year--Greiner's team called for growth between 2 percent and 3.5 percent--barely cracked the low end. That's not enough to drive job growth and a sustained recovery that feels, well, like a recovery. Unemployment nationally remains close to 10 percent; while in Colorado, it hovers slightly above 8 percent.

[ILLUSTRATION OMITTED]

"Traditionally, you'll see two or three quarters coming out of a recession, where real (gross domestic product) growth is somewhere between 7 and 10 percent," Greiner said. "This time around, we didn't get that, and we're not going to get that."

The sluggish growth has dampened the spirits of business leaders in Colorado. After recording two consecutive quarters of growing optimism in the state's economy, the Leeds Business Confidence Index showed a decline in expectations in October, dropping to 48.6 from 54.8 the previous quarter. An index below 50 represents negative...