An economic forum was held Tuesday morning to discuss the state of the economy and its future.

• This economic recession is different from previous recessions, according to economics professor Abdur Chowdhury.
• Applied Investment Management program Director David Krause said the back of the economic storm will hit this year.

Faculty from the College of Business Administration and local business leaders discussed the current economy and its future during the Economic Leadership Forum Tuesday morning in the Alumni Memorial Union.

Panelist David Krause, director of the Applied Investment Management program in the College of Business Administration, said a good metaphor for the current state of the economy is a storm.

"It is a level four hurricane, and we felt the front of the storm in the past four months," Krause said. "We are currently in the eye of the storm, and will feel the back of the storm in this year."

Linda Salchenberger, dean of the College of Business Administration, moderated the discussion. What is needed, she said, is a reinvention of the economy in order to thrive in the future.

"We can gain different perspectives by engaging in meaningful debate," said Salchenberger.

Abdur Chowdhury, a professor of economics, said some of the factors in the economic downturn are low consumer confidence and sentiment in the economy, low spending by consumers and cuts in labor.

"The confidence and sentiment levels have not been this low since the 1980s recession," Chowdhury said.

These factors, however, are different from previous experiences of economic recession, Chowdhury said. Labor cuts, which usually tend to have an effect on the manufacturing sector, have spread to the service sector.

David Clark, professor and chair of the economics department, said another factor in the downturn is the housing market. He said faulty assumptions were made about the broad housing sector: the housing market would not decline over a period of time, and real estate would grow in appreciation.

He said the housing market has been in a downward trend, but prices are finally beginning to plateau.

Jim Imhoff, chairman and CEO of First Weber Group, said the regional economy and housing market have not experienced as bad of a downturn as other parts of the country have. The housing market has struck worst in California, Nevada, Arizona and Florida, Imhoff, a 1966 Marquette graduate, said.

Another factor in the downturn has been the amount of trust placed on leverage by individuals, according to Mary Ellen Stanek, managing director and director of asset management for Robert W. Baird and Co. Leverage is the use of borrowed capital in order to increase investment return or finance assets.

Stanek, a 1978 Marquette graduate, also said household and business debt is increasingly higher than the nominal gross domestic product, and the economy is experiencing high volatility.

Krause said there will be market volatility in 2009 and 2010, going in between bull and bear markets. He said there will be "horrific" unemployment rates, close to 8 percent.

He said spending at lower levels and beginning to save could combat how overextended the economy has become. It would take several years to normalize consumption levels, he said.

Krause predicted an increase in regulation by the government.

"This will be a challenging year for this economy," Krause said.

Stanek and Chowdhury had more optimistic visions for the economy.

Stanek said steps to improve the economy have already begun in part by the Department of the Treasury, which has thrown money into programs. However, the effect of this needs time to be seen, she said.

She also said the economy needed to be de-leveraged, which is well underway.

Chowdhury said he expects the economy to start improving by the middle of this year. In order for the improvement, the government will need to be very active, he said.

He predicted that the GDP will flatten out by the third quarter of this year and grow by the fourth quarter.