Bank of America CEO's strategy: Hoard cash for next 6 months

Charlottte ObserverDecember 3, 2008 

The immediate future will continue to be rough, but the recession should shift to economic recovery sometime next year, the chief executives of three of Charlotte's largest employers and a top Federal Reserve Bank official said Wednesday.

The panel of business titans warned of short-term obstacles but shared long-term optimism at the Charlotte Chamber's seventh annual Economic Outlook Conference, which drew more than 650 people to the Westin Charlotte hotel uptown.

Joining the three CEOs — Ken Lewis of Bank of America, Bob Steel of Wachovia and Jim Rogers of Duke Energy — was Jeffrey Lacker, president of the Fed district that includes the Carolinas.

While economic indicators have deteriorated this year, Lacker said he expected the U.S. economy "to regain positive momentum sometime in 2009."

Lewis agreed: "I do see a ray of sunshine out there in about six months or so." Until then, Lewis said, households and companies should hoard cash and capital, and those who are optimistic can look for good investments — perhaps at a discount in the downturn.

Steel echoed that strategy, saying investors must walk a tightrope between being "prudent and cautious" and pouncing on great opportunities.

Lacker said his optimism for a 2009 upturn came from lower interest rates, lower energy and commodity prices, and a bottoming out of the housing market. Lacker noted, however, that he also predicted a next-year bottoming-out in housing the past two years.

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