National economics expert Scott Anderson couldn't do it. As much as he joked about trying to -- saying that he wore a bullet-proof vest in case anyone wanted to shoot the messenger and that he asked the Duluth Area Chamber of Commerce to serve drinks to loosen up his audience -- the senior economist for Wells Fargo banks couldn't put a happy face on "wealth destruction" and "one of the worst financial crises we've ever seen," as he referred to the current recession and depressed global economy.
"It's not pretty," Anderson said at a chamber-sponsored luncheon yesterday at the Radisson Hotel Duluth.
The unattractiveness includes home prices that are freefalling at a rate not seen since the Great Depression -- while foreclosures are mounting. By the middle of the year, 15 million households are expected to have no equity at all in their homes. New-home construction is down 75 percent. Debt levels are at a record high. An astronomical $30 trillion in wealth -- the equivalent of about three U.S. economies -- was lost in just one year.
Millions of jobs similarly have been lost since the recession started in December 2007; 533,000 of them evaporated last month alone. Double-digit declines in manufacturing are predicted. Unemployment is expected to peak at 9 percent by the fourth quarter. And consumer spending is down with consumer confidence in December dubbed by Anderson as the "worst ever."
Americans' debt is "unsustainable," he continued. It has doubled since the 1970s -- with 50 years of debt accumulating during just the past seven years.
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"And there's still a lot of uncertainty," he said. "I'm running out of [negative] adjectives to describe this whole thing."
However, while much of 2009 promises to be uglier than the ugliness of 2008 (yes, that's possible), "We're certainly not going to drop forever," Anderson said. "We're anticipating we will hit bottom fairly soon here."
And businesses, overall, he said, are well-positioned to rebound, just as they were better-positioned than consumers to weather the hard times. Also, banks have$700 billion in excess reserves they've been reluctant to loan but won't hold on to forever.
As depressing as the economic outlook was yesterday, doom-and-gloom can serve positive purposes. Many of us are thinking a little more about our finances and are making smarter spending decisions, as certified financial planner Andy Wheeler pointed out during a panel discussion that followed Anderson's address.
And "truthful information," as Anderson said he was providing, is needed, no matter how numbing it can sometimes be to absorb. With it, we can plan for -- and survive --difficult, dark days.
