Wyoming has not been dragged into much of the recession dogging the rest of the country, but the dismal national scene still affects the state, an economist said Wednesday.

"I'm long on Wyoming, but short on the U.S.," Ernie Goss told the annual economic forum presented by the Wyoming Business Alliance.

The current crisis arose from "bipartisan foolishness" from the mid- to late-1990s, said Goss, a professor of economics at Creighton University in Omaha, Neb., and an expert on economic trends in the region.

Both parties spurred a push for greater homeownership, which in and of itself is a good thing, he said. "But some folks cannot afford a home."

Homeownership rose from 64.8 percent of the population in 1995 to its all-time high of 68.9 percent in 2005, Goss said.

Then the market fell and is still falling for homes and agricultural land, he said.

The federal government's response has been to bail out major institutions such as AIG, Bank of America and General Motors, and getting a very poor return in the process, Goss said.

That behavior instigated many of the "tea party" protests on Wednesday, he added.

The bailout programs have been conducted mostly on a Washington, D.C.-New York City axis, leaving the rest of the country behind, he said.

Reviews of banking indicators show a healthy industry as seen in the recent profit reports of Wells Fargo and Goldman Sachs, Goss said.

But a recent survey showed 44 percent of bankers were tightening their credit standards, which affects the businesses in small communities that Goss dubbed "rural main street," he said. Business owners who cannot obtain modest loans to carry their companies through hard times are then forced to shut down and lay off employees, making the recession worse, he said.

Woes of major financial institutions have overshadowed the central issue of housing, Goss said. He believes housing prices will continue to fall and more homes will become vacant.

To slow those trends, Goss advocates tax credits for everyone who buys a home, and relaxing some requirements for those who buy rental property.

The 2001 and 2003 tax cuts on dividends and capital gains should become permanent, which would free money for investing in the stock market, he said.

Goss opposes the proposed "cap and trade" system of selling credits from companies that have met emissions standards to companies that emit greenhouse gases, he said. The Obama administration has said it would raise $646 million over 10 years while curtailing emissions of greenhouse gases. Critics call it a "carbon tax" that would cost everyone who uses electricity.

He also favored reducing government spending to less than 20 percent of the gross domestic product - but not now during the stimulus programs, he said. "Obama is 100 percent correct."

Long term, Goss said international markets express uncertainty about rising U.S. debt and taxes, and the anti-trade language in the stimulus bill that could backfire if other nations retaliate by not buying U.S. commodities including those produced in Wyoming.

He's also worried about an even steeper decline in housing prices and Asian countries' reduction in buying U.S. treasuries, he said.

Goss admitted his analysis of national and local economic trends was biased. "But this is biased toward the free market."

Reach Tom Morton at (307) 266-0592, or at tom.morton@trib.com. Read his blog at tribtown.trib.com/TomMorton/blog.

WBA holds Economic Outlook forum

By Daniel Craig

Star-Tribune videographer