National slowdown an opportunityfor those who’ve been prudent;fourth quarter may see recovery
Banking
‘Uncertainty’ is a word we keep hearing from our business customers and prospects as they discuss their outlook for 2008. Interest rates, a volatile stock market, credit concerns arising from the problems in the mortgage arena, the presidential election and the possibility of tax increases are all mentioned as issues that may ultimately impact business this year. As a result, we’re seeing a more conservative approach and perspective by these businesses toward their 2008 prospects. Given the declining rate environment, we are encouraging both our business and individual customers to consider whether they could benefit from refinancing their debt at this time. We are also suggesting to our investment customers, given the stock market volatility, that this would be an appropriate time to review their investment strategy.”
“In light of the volatile housing market and the credit crunch in the United States, the banking industry will be in a cautious mode for 2008. Banks will be looking long and hard at their options of how they can sustain and build growth in this challenged environment. That said, it is not all gloom and doom. The fallout from some of the issues plaguing certain regions of the country is not expected to be as severe in the commonwealth, and the U.S. housing market forecast is brighter in the next couple of years. With the Federal Reserve expected to continue to cut rates, it is a good loan environment for the consumer.”
“The ongoing concerns of the 2007 real estate market crash weighs heavily on our nation’s financial markets and institutions. Will lower interest rates help reverse this sluggish economy, or will inflationary pressures of the high cost of commodities stall any recovery?
“In the past, the central Kentucky economy seemed to be able to avert swings in the national economy. However, the 2007-2008 housing market has certainly slowed. We remain cautiously optimistic that the Bluegrass area will remain strong enough in the service and commercial sectors to overcome the housing slowdown. While we hope to see the beginning of a housing recovery by the fourth quarter, we fear this slowdown may carry over into 2009.”
“The Greater Louisville and Southern Indiana economies continue along a path of stability in spite of the turbulence in the national economy. The exception has been in the housing sector, in which we have seen a slowdown in sales of both new and existing homes. In other sectors we continue to see customers and prospects expanding their businesses and expect this to continue throughout 2008.”
“Concerns about the slowing economy are evident in every market throughout the country, in part, due to dramatic fluctuations in real estate. Since Kentucky has had neither the boom nor bust as some regions of the United States, we are confident in the resilience and balance of Kentucky’s economy. While 2008 may present some challenges, we are optimistic about Kentucky’s long-term success and are committed to funding the growth of this region.”
“The upheaval in our economy that occurred during 2007 has continued into 2008, and I anticipate that businesses will continue to have the challenges of operating within very volatile economic conditions for the remainder of 2008. The stress on the U.S. economy from the devaluation of the dollar, increasing oil prices, the subprime lending crisis, investment markets in disarray, weak consumer confidence, a decrease in consumer spending and a Federal Reserve System trying to balance growth and inflation for a strong U.S. economy is continuing in 2008. I would hope that the recent actions of the Federal Reserve to lower interest rates and the U.S. government’s financial aid package for taxpayers will help improve our economy.”
Accounting
“At DDF, we are actively working to face the challenges of a weakening economy during 2008. We are working to help clients stabilize their business plans and capitalize on the pro-business portions of the recently enacted federal economic stimulus package. Unfortunately, Kentucky businesses continue to face increasingly complex tax laws and strict reporting and governance requirements. We are positioned to help clients ease the burden but don’t sense much urgency in our state or federal governments to ease the complexity.”
“Presidential and congressional elections offer a platform to discuss tax policies and issues that often result in new tax legislation, though there will be no major overhaul of the tax code. The U.S. House is expected to hold extensive hearings on tax reform proposals, including repeal of the alternative minimum tax and lowering the corporate tax rate from 35 to 30.5 percent. Stay tuned in 2008, which promises to be an interesting year for tax legislation.”
“Kentucky’s business outlook for 2008 is much less robust than that of 2007. Several factors contribute to this, such as the credit crisis, the potential of tax changes on the horizon and the budgetary problems of the federal and state governments. It will be very important that both the tax systems remain positive towards businesses and continue to encourage business expansion. Kentucky’s budget crisis is particularly troubling as it relates to decreased funding for education and our state’s infrastructure. The upcoming presidential election could also signal a significant change in how we are taxed and how projects are funded. Decisions made this year will set the stage for our economic growth, or lack thereof, for many years to come.
“We have budgeted for a strong year in 2008. Businesses in a slow economy expect their advisers to bring ideas to the table that will help them sustain their businesses and achieve growth even when the economy experiences a downturn.”
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