Economist Notes That Global Downturn May Not Be Short-Lived

During his presentation at NACM’s 2008 Credit Congress in Louisville, entitled
"Outlook for a Global Economy—Implications of a Recession in the U.S.," Byron
Shoulton, vice president and international economist with FCIA Management, Co.,
Inc., noted that the current economic downturn plaguing the globe may not be as
short-lived as some would hope. "I think we’re really at a critical juncture in
the global economy," he said. "We are in a transition period."

Shoulton noted that over the last two years there has been a fundamental loss
of confidence in the U.S. financial system and while problems like a weak U.S.
dollar and inflation will eventually subside, the loss of confidence will not be
so easily restored and could prolong the current downturn. He also cited
problems with global rating agencies whose previous transgressions will, in the
future, be rewarded with what Shoulton considered to be a necessary increase in

"I believe we’re moving away from seven years of global growth," he said.
"We’re embarking on an era of high inflation, high interest rates and high

Going forward, he said, interest rates will rise and the concern of central
banks globally will become more inflation-oriented rather than growth-oriented.
He also referred to the banking sector’s recent write-offs, which he said would
top $1 trillion globally, as an indication of a weakened financial system that
may plague many other market actors. "Some of the good guys will suffer for some
of the excesses of the last few years," he said, adding that, overall, the
outlook is rather bleak. "It has all the makings of a prolonged recession."

On the brighter side, Shoulton was sure to note that, for U.S. companies,
overseas opportunities have never been greater. "It is a time of immense
opportunities for U.S. companies to expand in markets overseas," he said. A low
U.S. dollar coupled with strong global demand comes along every 20 years or so,
and Shoulton encouraged companies to take advantage of this. "U.S. exports will
thrive in this environment."

For continuous updates on this year’s Credit Congress and its educational
sessions, visit and
watch for the July/August issue of Business Credit magazine for a full
wrap up.

Jacob Barron, NACM staff writer

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