Steamboat Springs Consumers will drive the recovery of the U.S. economy, Carl Steidtmann said Wednesday at the Economic Summit.
Interest rates have decreased, the credit market has loosened and energy prices have dropped, said Steidtmann, chief economist for Deloitte. But people are saving more than ever, and economists aren't sure whether that's a temporary trend or a permanent shift.
"The message I have for you is the consumer has the means to spend," Steidtmann said. "The question is whether they'll get the will."
He offered an overview of the economy to start the summit, which is called "Thriving in Tough Economic Times." The event, put on by the Steamboat Springs Economic Development Council, continues all day today at the Steamboat Grand Resort Hotel. Steidtmann said he expects the economy to recover in about the fourth quarter of this year. Deloitte, his employer, is a global firm that provides audit, tax consulting and financial advisory services.
Good news for consumers is good news for the economy, Steidtmann said, noting that consumers account for 70 percent of spending. When buyers regain confidence, the economy is likely to rebound sharply, he said. Consumers' holding their wallets has resulted in pent-up demand for housing, cars and other retail products, Steidtmann said.
But even economists aren't sure how things will shake out with government stimulus money and increased regulations, he said.
The government will be far more involved in banking and other institutions. President Barack Obama's administration also will wind up sitting on a massive national debt; the Congressional Budget Office puts it at $1.85 trillion this year. And the government's policies could result in severe inflation in a few years, similar to what happened in the late 1970s and early 1980s, Steidtmann said.
"We are in an age of great transformation," he said. "It's a transformation that's going to change the relationship between government and industry, government and the individual. It's a transformation that's going to affect everyone in this room."
He attributed the economic downturn largely to banks.
"At the heart of the problem here is that the banks got extremely creative in finding new and different ways of losing money," Steidtmann said.
Large banks lost $1.4 trillion in eight quarters, according to his presentation. But the government has poured in aid worth about $10.7 trillion in programs across the economy. Steidtmann said he was optimistic that banks would earn their way out of the problems with the help of government.
"I guess if I was a betting man, I would bet the banks could do that," he said.
Steidtmann said he didn't think the economy had hit bottom. He expects unemployment to increase and construction to continue to drop off in Routt County.
One factor Steidtmann didn't expect: Locals aren't spending.
"I would've expected a very sharp decline, especially by tourists that come here, but I guess I'm surprised I didn't see some of that offsetting by the locals," he said.
Still, the tone of Steidtmann's overall speech was hopeful.
"I think there's good reason for optimism," he said. "There are a lot of challenges our economy faces, but if you look at the credit markets, they're very clearly signaling a recovery."
He encouraged the crowd to help.
"Go out and buy something," Steidtmann said.