Recession is Here, Economists Say

The 14th annual Business Forecast Luncheon, hosted by the Walton College of Business at the University of Arkansas, recently drew more than 1,200 people from across the state’s business and education sectors.

Speakers included Carl Steidtmann, chief economist and director of Deloitte Research – Consumer Business; Kathy Deck, director of the Center for Business and Economic Research at the UA; and David Kotok, chairman and chief investment officer at Cumberland Advisors.

Warren Stephens, chairman, president and CEO of Stephens Inc. moderated the event.

Earlier that day, President Bush announced a $145 billion economic stimulus package that Steidtman said would only go so far to help the ailing economy.

The reason for much of the recent economic turmoil is related to the bad debt and massive write-downs of major U.S. banks, he said.

The nation is in a recession that began in the fourth quarter, and the sooner banks write off the bad debt, the faster the economy will rebound, he said.

The Fed’s recent increases in liquidity will do some short-term good, but won’t address the long-term issues of solvency, and could cause higher inflation, he said.

Deck addressed economic concerns in Arkansas, including figures on personal income growth, the Fayetteville Shale Play, job creation and the housing market.

Though personal income recently increased faster in Arkansas than the nation as a whole, it still lags behind, at only 77 percent of the national average.

Kotok addressed the importance of emerging global markets. He advises clients to invest about half of their stocks in companies outside the U.S.