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Posted 12.11.2008

Predicting an ‘09 recovery

JP Morgan Chase economist upbeat about next year

By Bart Taylor

Yesterday, Jim Glassman, a senior economist with JP Morgan Chase in New York, told a select crowd of business leaders gathered in Denver at the Executive Leadership Forum that the economy will recover in 2009. "There’s nothing wrong with the U.S. economy that hasn’t already been fixed," Glassman said.

Glassman’s visit coincided with the latest remarkable development in the current global financial upheaval, as investors scooped up $30 billion worth of short-term government securities — at zero-percent interest.

Generally upbeat about the economy’s near-term prospects, Glassman suggested that the "housing correction is largely behind us," and that high oil prices, having "acted like a tax on the world economy," would likely moderate and respond more predictably to economic activity.

He was also supportive of the Bush Administration’s active role in quickly intervening in economic matters, citing inaction during the 1930’s as a contributing factor to the severity of the Great Depression.

"Economists are obsessed with the ‘30’s," Glassman said. "I think the lesson we learned is to aggressively utilize the infinite borrowing and lending capacity of the federal government to address problems."

At the same time he was critical of some in the press, for example chiding the Wall Street Journal for the series of "misguided" editorials they published earlier this year questioning the wisdom of the Federal Reserve’s interest rate cuts.

Glassman advocated ongoing government intervention, including monetary measures, and indicated the Fed will disengage from its aggressive posture when markets normalize.

To find out more about the Executive Leadership Forum contact Chris Silvestri at 303-859-2900 or at csilvestri@cresapartners.com.

Bart Taylor is the publisher of ColoradoBiz magazine. E-mail him at btaylor@cobizmag.com.

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