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Don’t get too downhearted about the current economic angst, financial expert John Stoltzfus said last week. On the other hand, “we suggest to investors that it’s not time to back up the truck and get overly enthusiastic” about buying stocks, either.

Stoltzfus is the director and senior market strategist in the Investment Strategies Group at Bank of America Corp. Based in New York City, Stoltzfus came to Des Moines to deliver the keynote speech at the Business Record’s annual Economic Forecast event on Jan. 20.

He predicted that the U.S. stock market could start moving higher by the end of this quarter in anticipation of a general economic recovery starting in 2010. He expects the economy to continue its downward slide this quarter, begin to stabilize and show growth in the fourth quarter.

The Federal Reserve’s fed funds target rate currently stands at a range of zero to 0.25 percent; Stoltzfus said the Fed probably will raise it to 0.50 percent by the end of the year. By then, 10-year Treasury bonds should yield in the range of 3.5 percent to 3.8 percent, he said.

For investors wondering whether this is a good time to put more money in the stock market, Stoltzfus suggested a careful, dollar-cost-averaging approach. “The high-grade corporate bond market might be better,” he said.

Stoltzfus spoke at Hoyt Sherman Place, a building that was constructed in 1923. “That was a boom period in the United States,” he noted, “when the stock market was going, to put it mildly, nuts.” Six years later, the economy started to come apart with the market crash of 1929, followed by the Great Depression.

“After a very rough period, fabulous things happened for the United States,” he noted. “All of that was very survivable. So don’t get too caught up in the current negative situation.”

A question-and-answer session followed the keynote speech, featuring Stoltzfus and these panelists: Joseph Folsom, district director of the U.S. Small Business Administration; Peter Orazem, professor of economics at Iowa State University; Tom Root, professor of finance at Drake University; and David Vaudt, auditor of the state of Iowa. Business Record senior staff writer Kent Darr served as moderator.

Here are some of the points made in that segment:

Iowa’s recovery: “The finance and insurance sector in Iowa so far is running counter to the national trends,” Orazem said. “Those companies should be in a good position to expand when the economy recovers.”

Government intervention: Debate continues about whether the federal government should have prevented the Lehman Bros. Holdings Inc. bankruptcy, but Root said, “They should have started earlier and let Bear Stearns fail and send a signal to the markets. Lehman was bigger, so it had a bigger effect when it failed.”

Gov. Chet Culver’s $700 million bonding plan for infrastructure: “I’m reserving judgment,” Vaudt said. However, he added, “the federal government is already doing that.”

Orazem said, “We’ve only lost 400 construction jobs since 2007, so the governor’s infrastructure idea is not necessary. He said we have a triple-A bond rating and he intends to use it; the reason we have a triple-A rating is because we haven’t used it.”

The Iowa economy: “We have a very diverse economy, and we were shipping a lot of stuff out last year when the dollar was low,” Folsom said. “Ninety-eight percent of our community banks remained profitable” last fall.

Inflation prospects: “There’s a lot of consensus that we’ll run into a significant patch of inflation down the road,” Stoltzfus said. “We think some of that will be offset … global central banks will be watching inflation like hawks. But we do expect a burst of inflation that will be commodity-driven.”

The event was sponsored by Bank of America and the Urbandale Chamber of Commerce.