First Tennessee Bank’s chief economist predicts the election of Sen. Barack Obama as president could bring a stimulus package even before the end of the year.
“There’s no sense in (President) Bush vetoing a stimulus that Obama will sign in January,” said Chris Low, chief economist for FTN Financial, whose parent company is First Horizon National Corp.
Mr. Low is in Chattanooga today discussing the state of the nation’s economy with about 450 local business leaders at the Chattanooga Convention Center. Mr. Low, who works in FTN’s offices in New York City and has 20 years of experience in studying U.S. and global economies, will address what type of recession the country is in, what does it do to the market and when and how the nation will recover.
“Unfortunately right now, it’s very difficult to answer the questions,” he said. “I hope it turns out I’m dead wrong and the economy recovers sooner than I think it will.”
The country needs credit and a resumption of lending to recover from the current downturn, he said, because that’s where stability comes from in the United States.
He doesn’t see the country recovering until late 2009, when the nation’s economy could begin to see positive credit and economic growth, he said.
Frank Schriner, president of First Tennessee in Chattanooga, said he was pleased Mr. Low could get away from New York to talk to people here.
“It’s exciting to get a chance to have him come to Chattanooga and talk about the national and global economy,” Mr. Schriner said. “I think all of us go to bed worrying about things — our 401(k), our jobs — and if it’s not us, it’s someone in our family or our friends.”
Mr. Low compared the country’s current economic situation with the recession that occurred in the 1990s, saying that ultimately what brought the country around then was the large number of new businesses that were started.
He said changes to the federal government’s bailout package, announced late yesterday afternoon, have him worried.
“I am sort of reeling a little bit,” he said, after hearing the news earlier in the day. “Congress is almost speechless because this is the second time the treasury has convinced them to vote for a bailout and then changed the rules midstream.”
Mr. Low said the current trouble in the credit markets will cause credit to tighten and therefore cost more for those looking to borrow. While the cost for a loan will change depending on the market, cities like Las Vegas could see down payment requirements of about 30 percent with 7.5 percent interest on a home loan.
He agrees with the sentiment of local officials that Volkswagen’s presence in Chattanooga has boosted the future prospects for the local economy, though job losses will be seen here, he said.
“There will be job losses here in other industries, just like there are everywhere else across the country, but you couldn’t ask for a better time for such a major employer to drop into your lap,” he said. “It’s an awful lot of jobs potentially, with all the related jobs that are going to come with it.”