|UMB chief paints picture of hard times ahead to captive audience at Avila|
|Kansas City, MO||
November 5, 2010
Shortly before his presentation, Peter deSilva was overheard making a promise that he wouldn’t get too depressing with his remarks. But when talking about today’s economy, be it nationally or concentrated on the Kansas City area, it’s difficult to be all light and breezy.
And deSilva, president and COO for UMB Financial Corporation, chairman and CEO of UMB Bank and chairman of UMB Fund Services, didn’t sugar coat anything during his 45-minute address to a group of about 100 students, faculty members, staff and others Nov. 3 at Avila University’s Whitfield Center. Times are tough, deSilva said, and they’re liable to get more difficult before they get better.
“By any measure, this has been the worst economic conditions since the Great Depression back in the (1930s),” deSilva said. He went on to say that, while officially the recession began in December of 2007 and, according to economists, ended June 2009, he didn’t expect many to be buying that.
“With 10 percent of our nation unemployed, I don’t see how we can consider the recession over,” he said.
A perfect storm of economic conditions – the banking crises of big lending institutions like Bear Stearns and Lehman Brothers and subsequent seizing of credit, the piling up of individual and corporate debt, the crash in home values – came together at the same time to put the U.S. in this position. It’s going to take some time – perhaps 2014 or even 2015 – for the country to recoup all the lost jobs, deSilva believes.
“The American people have a love affair with debt,” he said. “As a consequence, we’re going through a major process of de-leveraging. And if we’re de-leveraging, we’re not consuming, which is still 70 percent of our economy.
“Have we seen the bottom yet in housing prices? I would argue not. I’m not a doomsday guy, but I think it’ll take a long time to work our way out from under all of it.”
deSilva did relay some good news, however. Kansas City has weathered the storm reasonably well, faring much better than economies in states like Florida, Arizona, Nevada and California, which all have suffered from vast over-development. The diversity of the economy has helped, he said, along with the city’s central location, low cost of labor and friendly tax and business climate.
According to deSilva, Kansas City is the 28th largest metro area in terms of gross domestic product in the U.S. and has the 85th largest economy in the world.
“Kansas City entered the recession later and will come out sooner,” he said.
deSilva did close out his comments by saying, however, that the city needed to pull together across state lines and become much more aggressive in touting its assets and luring business and people to the area.
Finally, there was a bit of light.
“(The U.S. has) the strongest economy on the globe,” he said. “It is going to get better.”
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