The lagging global economy will result in slow growth for local businesses, CSU Channel Islands professor Sung Won Sohn said Thursday morning at the “Global Economy Impacts on Regional Business” summit presented by The Bank of Santa Barbara at Fess Parker’s DoubleTree Resort.
But before talking business, Bank of Santa Barbara CEO Eloy Ortega read the transcript of a video that Navy Master Chief Petty Officer Louis Langlais recorded for his family. The SEAL Team Six member and Santa Barbara native was killed in action in Afghanistan in August.
All proceeds from Thursday’s event will benefit the 44-year-old’s family — his wife, Anya, and their two young sons, Gabe, 9, and Jack, 7.
“I love you so much. I know I keep saying that but it’s true — I do,” Ortega read. “Gabe and Jack, when you’re older and watch this video, hopefully it will make a little more sense. I want you to know Daddy is over here fighting this war so when you’re older you won’t have to do this. I don’t want you to do this. I don’t want you to fight this war on terrorism.”
After a moment of silence, Sohn and former Federal Reserve Bank senior economist Gary Zimmerman discussed the global economy with about 150 people at the summit.
Although China, with a projected 9 percent GDP growth, and Germany are faring well, the financial crisis in the Eurozone could push advanced nations into another recession, according to Sohn. He said foreign banks’ exposure to Greek debt is high, and the Eurozone must break up.
“We are like a spider web,” Sohn said. “What happens overseas does affect you, and in part because of that our jobless rate is very high, we’re not creating jobs, small businesses cannot get loans and cannot generate income so they are laying people off.”
The key to a quicker U.S. recovery is job growth, which can be spurred by the housing sector, according to Sohn. He said there are 22.5 million households with a mortgage rate of 5.6 percent or higher. If they were to refinance it could put about $50 billion back into the economy.
Sohn also suggested using banks’ excess liquidity to fund small-business loan guarantees and easing government regulation.
He said a short-term fix includes economic stimulus funding, while spending and tax cuts could bring more corporate money back to the United States.
In terms of Santa Barbara County, Sohn said the good news lies in the tourism sector, single-family home sales and the high-tech sector.
The local economy will mimic national trends, Zimmerman said, which projects minimal job growth, high unemployment and a depressed housing market until 2014.
The Bank of Santa Barbara presented the event in association with the Santa Barbara Region Chamber of Commerce and was sponsored by the CSU Channel Islands Institute for Global Economic Research.
— Noozhawk business writer Alex Kacik can be reached at akacik@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.