By David A. Wise
President Barack Obama must act to address a “crisis of confidence” in the financial markets in order to help pull America out of the recession, UW-Madison Business School Dean Michael Knetter told business executives at an economic forum in Milwaukee today.
Knetter said Obama also must act to restore the public’s faith in the economy, while continued action by the Federal Reserve and the Treasury Department is needed to prop up banks in order to keep them lending.
“We can’t let the banking system completely collapse,” Knetter said.
While Knetter urged federal action through a stimulus package to boost spending and allow excess capacity in the market to correct itself in an orderly fashion, he also said it was important for Obama to boost people’s confidence in their economic futures so they are comfortable spending today.
“The administration needs to convince people we can’t all be fearful right now,” Knetter said.
If people continue to cut spending, that will cause further contraction in the economy and could bring about a situation similar to the Great Depression.
Knetter noted that in some ways, the economy is better positioned now than in the 1970s and 1980s. He predicted the economy will begin to climb out of recession in mid-to-late 2009 and that unemployment will hit bottom in early 2010.
“It’s not as bad as we think it is right now, and our best days are still ahead,” Knetter said.
Knetter was one of five speakers to address the Economic Trends 2009 Breakfast presented by BizTimes Milwaukee, The Executive Committee and the Independent Business Association of Wisconsin. Northern Trust was the lead sponsor.
Julia Taylor, president of the Greater Milwaukee Committee, presented an informal survey of top Milwaukee CEOs. She reported that all of the CEOs she spoke with remarked that they had never seen anything like the current economy before.
While some of the executives had differing views, she said the general consensus was that a stimulus package will help the economy, although it raises fears of inflation and declining value of the dollar. Additionally, the executives said that credit must loosen and consumer spending must increase, while some also predicted that the economy wouldn’t begin to rebound until late 2009 or later.
Other speakers included Patient Care CEO Jane Cooper, who predicted health care reform would happen in 2009 or 2010; Badger Meter CEO and Milwaukee Water Council Chairman Richard Meeusen, who discussed the Water Council’s efforts to link government, universities, businesses and non-profits in order to make Milwaukee the world leader in water technology; and Grandparents.com CEO Jerry Shereshewsky, who urged attendees not to forget the 70-million strong market of grandparents, who collectively spend billions each year on their grandchildren.