OLIVER: We have about 450 people who registered to be here this morning. So obviously we’re living through some unprecedented times, the likes of which I haven’t seen in my 22 years in banking, and hope we don’t see again once we get through it.
So the big question for the experts is: when will we get through it? The man who thinks he knows is Ken Mayland of ClearView Economics in Pepper Pike. He’s well-known for his economic forecasting, and to the anxious business people having breakfast, he gave some reasons for optimism.
MAYLAND: During these difficult times, during this crisis—this qualifies as a crisis—crises always end. When you’re in the trenches, it seems like the world is literally coming to an end. It’s difficult to see the path out.
Mayland has his own estimate of when things might start turning around. He thinks the worst of the decline was in July, and given that recessions tend to last about ten months, that pegs a turnaround to late spring or early summer of next year. How can he be so optimistic? According to his models, in many sectors of the economy, the worst is behind us. Take housing, which helped get us into this mess.
MAYLAND: If it were in front of us, it would create extra drag on the economy in the months ahead. But, no, this decline is in back of us. So we’ve already suffered the impacts of that pullback on the economy.
And there are other bright spots. Banks, he says, are lending money again. And though he’s skeptical of its game plan, he credits the government for actively trying to fix the problem. His biggest warning is that that non-residential real estate—office buildings, hospitals, and the like, could be in for a big fall. He estimates that declines in that market could shave off half a percent of GDP next year.
MAYLAND: I can see that the prices of non-res properties are falling, and seeing some significant retrenchment. Not unlike what you've seen in residential investment.
But, despite commercial real estate, if things start to look up next year, is it time to invest? KeyBank Chief Strategist Bruce McCain said this downturn is much bigger than a bear market, but we could be ready for a rebound.
McCain says headlines lag the market, so when the news is bleak, it might actually be a good time to invest—even if it feels bad emotionally.
McCAIN: You have to be willing to invest on faith. If you wait until it feels good to be invested, you’ve probably lost most of the advantage. In fact, the time to worry most is when the market does feel good. That’s probably when you’re at the top of this range, rather than the bottom of this range.
That may be fine for investors, who can afford to wait, but for workers worried about their jobs or struggling to make ends meet, their turnaround can’t come fast enough.