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The wages of sin are recession, economist Robert “Tim” McGee told a crowd of 300 people at last week’s 2008 Economic Forecast. And we’re all sinners.

McGee, the Director of Macro Strategy and Research at U.S. Trust, Bank of America Private Wealth Management in New York City, made his first appearance at the annual event presented by the Business Record. Among his many credentials, he placed first in The Wall Street Journal’s forecaster rankings last summer for the second time in a row.

McGee spoke here on Jan. 22, the day when the Federal Reserve Board’s Federal Open Market Committee slashed its interest rate target on overnight interbank loans by three-quarters of a percentage point. In his opinion, Chairman Ben Bernanke and his crew waited too long.

For one thing, the recent rise in the nation’s unemployment rate suggests that the economy is heading into recession. Unemployment bottomed out right before the previous two recessions, McGee noted. “It’s hard to find a time like now when we weren’t going into recession,” he said. “That suggests the Fed waited too long to cut rates. A lot of smart people think we’re in a recession right now.”

The economies of Florida and California certainly seem to be in recession, McGee said, and added, “together they’re a fifth of the U.S. economy, so they’re going to be a drag” on the rest of the country.

McGee singled out a number of sinners who contributed to the ongoing financial credit crisis:

• Lenders. “In 2006, new-home construction started to decline, but lenders kept lending,” he said. “They started lowering their standards because they were under pressure to make quotas and make profits.”

• Ratings agencies. “If you didn’t give a high enough rating (to securitized debt), someone else would be glad to go along.”

• Appraisers. “If their appraisals weren’t high enough, they would start to lose business.”

Wishful thinking played a part every step of the way, too, McGee said. First came the thought, voiced a year ago by Bernanke, that damage caused by problems in subprime loans would be contained to that sector. Then came the hope that the financial struggles of the United States would be confined here.

Recent weeks have made it clear that the money woes are spreading not only throughout the U.S. economy but around the world.

It’s not all gloom and doom, however. “The lower interest rates should help prevent a severe recession,” McGee said, and “the stock market has just about discounted the earnings slowdown.”

At this point, McGee said, businesses dealing in infrastructure and natural resources continue to benefit from strong global growth. The financial and consumer discretionary sectors are the “victims of domestic housing excess.”

China’s economy will continue to do well, he said, because of the unprecedented number of people in that country moving out of extreme poverty and beginning to buy all kinds of household goods.

In 2008, he predicts that rich nations, including the United States, will see 1 percent to 2 percent growth; poor countries will see 6 percent; and the overall result will be global growth of 4 percent, which McGee called “pretty good.”

He expects our economy to come back as it has done historically, but listed factors that could slow or derail the comeback: a move toward protectionism; tax increases; higher oil prices; geopolitical surprises; environmental catastrophe.

Protectionism is the biggest threat, in his view. “When unemployment grows, that’s when there’s the greatest political pressure to get protectionist,” McGee said. “We’re one of the biggest beneficiaries of global trade.”

As for geopolitical surprises, he said “a large part of the world wants to derail globalization” and noted after his speech that Iraq’s invasion of Kuwait, which led to the first Gulf War, and the terrorist strikes of Sept. 11, 2001, both came at times when the United States appeared to be economically vulnerable.

Despite all the bad news, McGee said, “we should be grateful that we can weather these things and come out of them.

“We’re in the part of the economic cycle where everybody gets exercised about recession, but it’s not that big of a deal.”

The Economic Forecast event was sponsored by Bank of America and Uniquely Urbandale. It was followed by a Book of Lists reception, sponsored by Valley Bank, the Community Foundation of Greater Des Moines, Ryan Companies US Inc., Hubbell Realty Co. and Prairie Meadows Racetrack and Casino.