Where to From Here?
In May 2019, the U.S. economy registered the longest economic expansion of all time. While the recovery has indeed been long and asset prices have soared, the strength of the real recovery has been less than awe inspiring. Here we are, 10 years into the global expansion, and despite unprecedented monetary and fiscal stimulus, the U.S. economic growth rate has been 50% below its long-term trend.
Meanwhile, the Fed appears to have halted its rate hike cycle and central bank after central bank has no confidence that we can move off either microscopic or negative rates without causing some sort of financial or economic upheaval. At the same time, America’s debt bubble has continued to expand. After a $1.5 trillion deficit-financed tax cut, total debt, which is now $22 trillion, will increase to as much as $35 trillion in less than a decade. ($35 trillion in U.S. debt is larger than the debts of every other nation in the world – combined). Deficits will become $2 trillion over the next five years.
Looking forward, we are now late in the economic cycle and the impacts from “Trumpian” fiscal policy will diminish in 2019 and 2020. Will the markets and economy be able to stand on their own fundamentals? Or is this yet another bubble recovery built on cheap debt and low rates? What will happen to the debt bubble, not if, but when we enter a recession? How will policy makers respond to a weakening economy and massive debt loads? Where are we heading?
Presenter: Tom Slefinger, Senior Vice President, Institutional Fixed Income Sales, Balance Sheet Solutions
Program Level: Intermediate
Field of Study: Economics
CPE Credits Available