On Friday, September 25th, members of the FACC tuned in for the fourth annual teleconference with Dr. Brian Fabbri, Chief U.S. Economist for North America, BNP Paribas. His presentation this year was entitled Economic Recovery is Here.

Dr. Fabbri began by sharing his belief that the financial crisis in the United States is “mostly” over. He noted that the financial markets, a prerequisite to economic growth, are "something like normal" and in a much healthier state now than they were one year ago. Dr. Fabbri noted that the one exception to the recovery is the housing market, which is still being funded by the government and not by the financial markets.

Dr. Fabbri stated that he does believe the recession is over. However, besides inventory “correction” in the third and fourth quarters of 2009, it will be difficult to further increase GDP next year. Facing debt, job loss, loss of savings, loss of equity and decreased compensation, consumers are simply not spending. Dr. Fabbri also predicted that unemployment, after peaking at around 11%, will be very slow to decrease. This is especially due to several legislative items on the agenda in Washington, such as new healthcare policies and financial regulatory reform. Both may be very costly to employers.

Finally, Dr. Fabbri discussed the government’s role in the U.S. economy, noting that most of this year’s $800 billion stimulus package has been dispersed and that another will need to follow next year. He believes that the U.S. Treasury will have to play a continued role in the economy as we experience downward price pressure, falling rents and an inflation rate of near zero percent.

Predicting a "sluggish economy", Dr. Fabbri concluded by advising listeners to invest in bonds instead of the stock market. He also suggested that listeners diversify their assets in the developing markets of such countries as China and India. Both will experience growth rates of up to 9%, while rates in developed countries remain at about 2%.

Please click here to listen to Dr. Fabbri's presentation.