One panelist at the Newsmakers’ Forum earlier this month asked, and then answered, his own question—“Why does everybody feel nervous?”

That panelist, Rick Mattoon, senior economist at the Federal Reserve Bank of Chicago, had a ready answer, to wit, that people remain unsure how contained the housing sector problems are and whether they will drag down the rest of the economy in 2008.

“Fundamentally the economy is strong. Job growth is good and unemployment is stable,” he told a gathering of 150 business leaders at The Business Ledger’s year-end Newsmakers’ Forum at Arrowhead Golf Club in Wheaton.

“I expect the economy to pick up in the second half of 2008. But I have a concern about housing sector problems bleeding over into the rest of the economy. That could happen also with the energy sector.”

Another panelist, Thomas Buchar, vice president of growth for InterPro Translation Solutions, Inc., agreed that there would be slow growth in 2008. He pointed out that there would be an opportunity for small businesses who are exporting products.

“There will not be a better time than in 2008 because goods have not been as cheap in 25 years.”

Another opportunity will be the development of more green technology (environmentally friendly products), according to Buchar. But he added that the war in Iraq has diverted some government resources which could help finance research in those types of products.

“I am an optimist about going green,” he said.

Uncertainty was the word from panelist Paul O’Connor, the outgoing executive director of World Business Chicago.

“What will happen to the economy in 2008 is anybody’s guess. We could tip-toe through 2008 without problems since the economy is fundamentally solid,” he said. “But housing problems could be like the dot-com decline a few years ago.”

On a positive note regarding the energy sector of the U.S. economy, O’Connor pointed out that the United States gets about 50 percent of its carbon fuels from Canada and that the development of oil in Alberta will provide a stable source of oil from a friendly county just across the border.

Overall, he said one of his main concerns is that the value of the dollar is weak. “It is pathetic and dangerously weak,” O’Connor emphasized.

More pessimistic was David Nielsen, president of Big Wave Advisors in Wheaton.

“We will be in a recession this time next year,” he predicted. “Sub-prime loans in the housing market are the tip of the iceberg. There will be problems in other areas such as auto loans. What troubles me is that we have a credit-addicted economy which will start to unravel.”

Nielsen noted that at this time last year, not one of the more than half dozen writers of economic outlook material mentioned that sub-prime loans for homes would be a problem in 2007.

The big question now, he said, is the government getting involved in the credit market.

“The announcement in early December by the White House about help for the sub-prime problem is a disaster because the market mechanism will not be allowed to work.”

Nielsen also pointed out a problem with some Wall Street firms. “When I bought a house years ago, you paid 20 percent down or you did not get the house.”

Now, he noted, Wall Street companies have gotten into the business of packaging mortgage securities which allow for lower down payments for a house.

“Those companies are not your best friend,” Nielsen said. “They are looking for ways of selling product fees.”

During the question and answer period which followed the panel discussion, O’Connor pointed to positive news about a particular aspect of the suburban economy. He noted that there is increasing interest from China about investing in the suburbs, particularly in the Aurora, Warrenville and Naperville area.

O’Connor explained that the Chinese government has been pushing Chinese companies to enter the U.S. market.

“They seem to go by comfort level and some companies seem to favor suburban locations over locations in large cities like Chicago.”

He said there need to be local economic development organizations to meet the needs of Chinese companies for information about where the best place is to locate. These organizations also need to work to improve the education of local workers.

“The skill levels of some local people are pathetic,” O’Connor said. “Our local region has dropped the ball. This is really a bad situation.”

Buchar agreed and said this area should react to the Chinese interest.

“The Chinese are loaded,” said. “Take advantage of it with centers for economic development either here in DuPage County or in Will County.”

In addition to the Chinese there are investment opportunities with companies from other countries like India, Australia, Ireland and Argentina, he said.

Nielsen commented about the money situation around the world.

“There is a ton of money in the world now. We have all the liquidity needed, but the credit markets are locked.”

But abundant money is not the situation with one of the biggest liabilities hanging over the U.S. economy. Mattoon cited the unfunded liability of Social Security as more and more Baby Boomers enter retirement years. He said one solution is to find some way to reduce benefits. Another one would be to raise taxes.

But even more worrisome to Mattoon is the rising cost of Medicare.

“Unless we figure some way to get health care under control, there will be major problems,” he said. “The medical records companies are doing a horrible job. There is incredible waste in processing medical claims.”

In more general comments, some speakers touched on the topic of mergers and acquisitions of companies. Nielsen said there could be some lending institutions “doing under the table deals so executives would not have to go public with financial details.”

Buchar added that generally that mergers and acquisitions were not going to stop although there may be a lull before the market sees more such activity in 2008.

The presidential election did not bring up much discussion among the panelists. Buchar said there will probably not be much difference to the economy no matter who is elected. Nielsen was blunt, noting that “No matter who wins, we are going broke in this country because taxes continue to go up.”

The event was sponsored by Dugan & Lopatka, Harris, and InterPro Translation Solutions, Inc. The Carol Stream, Downers Grove, Lisle, Naperville and Warrenville chambers of commerce provided marketing assistance.