By Jim Baer
It wasn’t all doom and gloom. The 21st annual Civic Entrepreneurs Organization (CEO) Economic Forecast luncheon was held on October 16 at the America’s Center downtown. Three high level conomists/forecasters
shared their perspective on the market.
Alan Beaulieu, senior analyst, economist and principal with the Institute for Trend Research (ITR), Allan Sloan, senior analyst at Fortune Magazine and Brian Wesbury, chief economist, First Trust Advisors, L.P. were asked to break bread and make predictions for 2009 before a roomful of CEO members and friends.
Well first the gloom:
“Clearly we are now in a recession. We were not that way back in July and August. Housing is a big problem and the credit crunch is killing consumer confidence,”
said Wesbury.
Beaulieu took a much harder stand.
“The economy is falling apart. The perfect storm is at our doorstep. Our home values will be down through 2010, and there are no bright spots in consumer optimism. But there’s good news. I just saved $300 on my automobile insurance.”
Everyone laughed.
There’s a tiny bit of illumination at the end of that very dark tunnel.
“My view is this will be short-lived phenomena. I might compare this to what happened after 9/11. Everything ground to an immediate halt. But within 45 days, our nation began to recover,” said Wesbury. “We have a 230-year history to show that optimism always prevails,” he said.
Beaulieu said now we have to find a way to pay our new 1.2 trillion dollar debt. “The pain is on Wall Street, and now it’s on
Main Street.”
Forecasting for the holidays, Beaulieu said Christmas sales, at best will be bleak. “Our consumers need a lot of help. We are just in a pessimistic mood and that will reflect in negative retail sales.”
Sloan, senior editor at Fortune and previously Newsweek’s Wall Street editor concurred pretty much with the two economists.
“I’m afraid many have hit the ‘investors’ trifect.’”
By that, he meant people are buying stocks and bonds high, selling when they are very low and investing badly. “That’s just the wrong way to go about it,” said Sloan.
He cautioned investors to cease trying to live beyond their means. He gave examples. “If you are going to take a trip to Tahiti or remodel your kitchen, do NOT put it on a credit card, unless you are collecting air miles or earning points, or plan to pay it off immediately. “If you borrow any substantial amount of money these days, you will expect to pay it back at least 16 times its value,” stated Sloan.
None of the three see an economic
turn around any time soon, and Wesbury believed the winner of the national election would not effectively change the outcome to any degree.
Beaulieu said there are ways out for business to perform well in 2009. He
warned CEOs “cash is King” and cautioned them to invest cautiously. “We’re still the most prosperous country in the world. A recession is not a be all or an end all,” he said with certainty. |
