Hoffman: Economy could rebound in second half of ’09
The organizers of Monday’s panel discussion on the current recession asked Stuart Hoffman to keep his remarks clear and succinct. So he obliged.
“The economy sucks,” he said. “It’s going to get worse before it gets better and Obama can’t fix it. Any questions?”
Relax, he was just kidding.
Actually, Hoffman, senior vice president and chief economist for PNC Financial Services Group, held out hope that the economy might begin to right itself in the second half of 2009. He said falling gas prices, aggressive rate cuts by the Federal Reserve (another rate cut was expected Tuesday), an anticipated financial stimulus plan by the incoming Obama administration and some kind of measure to stem the drop in housing prices could work to right the economy later next year.
But not before unemployment rises to 8.5 percent, Hoffman predicted, meaning another 3 million people will be thrown out of work on top of the 10.3 million Americans already unemployed.
“For the next six months,” Hoffman said, “the U.S. situation will continue to deteriorate.”
Hoffman was part of a three-man panel of experts in a program called “The Recession Unraveled: What to Expect in 2009.” They spoke on the economy, the causes of the current recession and its impact on the average American not to mention charitable groups and giving.
The program, which was presented by the United Jewish Federation’s Community and Public Affairs Council and 2009 Community Campaign, took place at the Buchanan Ingersoll & Rooney law firm, Downtown. Approximately 170 people attended.
In addition to Hoffman, Chester Spatt, director of the Center for Financial Markets at Carnegie Mellon University’s Tepper School of Business and Jonathan Westin, assistant director of legislative affairs for the United Jewish Communities, rounded out the panel. Geoffrey Gerber, president and chief investment officer of Twin Capital Management, acted as moderator.
Spatt, a former chief economist for the U.S. Securities and Exchange Commission, presented a detailed, sometimes complicated assessment for how the United States, indeed the entire world, had drifted into one of the worst financial crises in modern times. Among those reasons, Wall Street firms had leveraged themselves to “extraordinary levels.”
He also criticized financial institutions for “outsourcing their due diligence” and bemoaned the lack of transparency of these firms, which he said has contributed to a freeze in the lending market.
“All these things have led to technical difficulties in the market, and some of them at least are now getting attention by the SEC,” Spatt said.
Westin focused more on the impact the crisis was having on public funding sources for charitable institutions, including the 157 Jewish federations in North America, which have raised more than $10 billion for social service programs.
Westin said the crises could hit especially hard Medicaid, which is among the costliest line items in state budgets, and infrastructure programs, which he interpreted to mean things such as nursing homes and food pantries, as well as highways and bridges.
He said Obama’s anticipated stimulus plan should include charitable initiatives as well as help for infrastructure and restored funding for the Social Service Block Grant program, which assists philanthropy.
UJF Chairman Daniel Shapira, who opened the program, urged the audience to maintain their giving levels, calling the current crisis “a perfect storm” that affects both the donors and the recipients of aid.
“Right now is the time where you have to stand up and be counted,” he said, “because this is where you’re needed most.”
(Lee Chottiner can be reached at email@example.com.)