Catalyst Corporate Studies Economic Expansion Potential with Lead Economist

Some signs point to an impending recession, but the economy’s record-long expansion ‘still has legs.’

8/13/2019 

Stocks

Rising interest rates, international trade tensions, and the Treasury yield inversion have sparked concern within the financial industry. Some economists believe a recession is looming, while others remain optimistic. 

“We are at a pivotal moment in U.S. economic history, and this record-long expansion still has legs,” said Bernard Baumohl, Chief Economist at the Economic Outlook Group. 

Baumohl, the Wall Street Journal’s most accurate economic forecaster in 2018, recently provided an analysis of the U.S. economy. Key takeaways include: 

  • The U.S. economy has begun its 11th consecutive year of growth – for the first time in history – and it’s still moving forward. 
  • The current unemployment rate (3.7 percent) is the lowest in nearly 50 years. 
  • Wages have improved, and U.S. consumers have ramped up spending. 
  • Inflation remains dormant. 
  • Technological innovations continue to transform the very fabric of our economy and society. 

“But, we can’t focus solely on the current state of our economy,” Baumohl said. “If the past has taught us anything, it’s that there are reoccurring factors that indicate a potential recession, and it’s important to be aware of them.”   

He also shared thoughts on several significant economic issues at play in today’s economy:  

  • The White House could raise tariffs on ALL Chinese imports. Tariffs on India, Vietnam, and Europe could follow. 
  • Geopolitical threats are flashing “RED” in Iran, North Korea, South China Sea, Venezuela, Libya, India/Pakistan. 
  • Investor appetite for U.S. federal debt is not infinite. Funding $1 trillion a year to cover budget deficits and $22 trillion in debt will inevitably lead to higher interest rates. 
  • A polarized political climate during the 2020 presidential campaign may sap energy from an aging economic cycle. 

According to Baumohl, these threats could greatly impact U.S. economic standing. But, the housing market is also a core component of its health.  

New and existing home sales have slowed, Baumohl said, leaving the market somewhat stagnant.  

“Housing has been terribly sluggish, despite low mortgage rates, the strongest job market in 50 years, and rising incomes,” he said. 

Baumohl cautioned, “A weakening economy, trade tensions, and scarce inventory will reduce the pace of home purchases. Plan accordingly.” 

Baumohl will speak at Catalyst Corporate’s 2019 Economic & Payments Forum, Sept. 30-Oct. 3 in Frisco, Texas. To learn more about your Association’s Strategic Link partner, visit Catalyst Corporate online or contact VP of Strategic Resources, Jason Smith, at  208.286.6794.