Federal Reserve Chairman Ben Bernanke will arrive in Indianapolis Monday morning for a rare appearance before the Economic Club of Indiana that will be watched by investors and markets seeking clues to the future of the economy in the closing weeks of the presidential campaign.
Bernanke’s speech at noon at the Indiana Convention Center comes just a couple days before the first presidential debate in Denver between President Obama and challenger Mitt Romney where both candidates’ vision of America’s economic future will be on stage.
“Businesses and banks are more nervous,” said Dr. Matthew Will of the University of Indianapolis. “It looks like there may be more taxes, more regulation, and as a result, they’re hesitant to loan even to companies that are turning a profit at the moment because they may not be turning a profit next year.”
Bernanke’s topic will be the top 5 questions facing the U.S. economy and the man who is perceived as running it.
“He hasn’t told us what the five questions are going to be but I can tell you they’re probably related to inflation, monetary policy, probably interest rates staying low and unemployment.”
While unemployment has stubbornly refused to drop below 8% and interest rates remain at historical loans, the economy remains stalled and that’s frustrating to small business owners like Scott Wise of Scotty’s Brewhouse.
“Currently I would love to open two or three restaurants right now. Unfortunately I only have the ability to get lending for one new restaurant. For every restaurant I can open I can add $3.5-5 million in gross sales in the area.”
Wise said his nine locations do $35 million in sales per year but he’s pushed up against the cap of how much money banks will loan a small business.
His only solution is to find private investors.
“If the banks are too timid to loan on their own because of what’s happened in the past, then the only answer is the government has to back them more and give more support to do smart lending.”
Dr. Will said Bernanke won’t necessarily find a supportive audience of small business owners at the Economic Club.
“Within in the business community he’s not very popular at this moment so while the room’s going to be full, its not going to be full of people who are friendly to his policies.
“Some people doubt if Bernanke actually has any influence anymore,” said Will. “He’s been trying for many years now to turn the economy around with no success, so, right now many of his detractors say Bernanke does not have any more tricks in his bag.”