At the beginning of every year, around the time holiday lights come down, there are flurries of headlines, many professing to make a “big” call or some other bombastic prognostication about where the economy or markets are expected to go. Most will go awry, or become obsolete, within weeks of their publication.

Let’s try to make this one different. 

Here are three key talking points to guide you in your discussions with clients for 2016.

Slowing is Not Stopping

With headlines focused on a Chinese hard landing, the risks of ISIS terrorism, the death spiral of the Brazilian economy and yet another slowdown in U.S., European and Japanese economic data, the financial media is acutely focused on the downside risks to global growth. Beyond these worries, the reality of the world’s aging population is receiving increasing airtime as a key contributing factor for global weakness. That is no surprise: According to the United Nations, the proportion of the population older than age 60 in developed countries is expected to double from 15% to 30% by 2025. This demographic trend means people are spending and investing and borrowing less. In other words, they are drawing more from the economy than they are contributing. It seems everywhere we look, fears exist that the world is at best mired in a kind of secular stagnation, or at worst on the brink of another recession.

Without a doubt, the world has growing pains, and all of the above-cited factors are pulling down output potential. China does have some major overhangs to correct within the banking and housing sectors, and while they have the forbearance to stand behind bad debts, they are clearly resisting another “shock and awe” fiscal stimulus given their goal to restructure toward a consumption and services economy. 

In the U.S., the Fed has come off the zero bound in interest rates, and there seems to be little political appetite for anything other than gridlock in addressing long-term structural issues like immigration reform, changes to the tax or Social Security system and income inequality. In Europe, countries remain under pressure to meet the Maastricht Treaty debt and deficit rules, and the impacts of the refugee crisis are becoming more and more complex. Japan continues to grapple with low confidence and deflation psychology, while at the same time trying not to make another near-fatal misstep with tax increases in support of budget consolidation as it did last year. 

Yet even with these factors all in play and assuming there will be no improvements, the world is growing. U.S. GDP growth will likely be recorded at between 2% and 2.5% for 2015. Europe and Japan are expected to clock in at 1% to 1.5%. And while China has downshifted from 10.5% five years ago, its growth is still officially reported at 7% today. Putting the world together, it would seem global growth was still managing 3% to 3.5% in 2015, and doing so during just about every worst-case scenario. While it’s true a large random shock could always occur, and there exists limited policy ammunition, the most talked about concern—a Chinese economic meltdown—seems overplayed. The global economy has already adapted to weak growth in China, and the government still has plenty of ammunition to avoid a true hard landing. 

Furthermore, there are none of the typical signs of rising recession risks. For example, while housing has boomed, especially in some trophy cities, other cyclical sectors remain low as a share of GDP. And while there may be small asset bubbles in some markets, there are not systemic bubbles similar to the tech bubble of the 1990s or the subprime housing bubble in the 2000s. Inflation is low, and it is likely to remain below target for an extended period. Finally, oil prices, a frequent factor in recessions, are well below levels that have triggered trouble in the past. 

Slow growth is not the same as no growth, and certainly not a reason to shun the global markets. And upside surprises lurk as a result of sustained low energy prices that may be a boon to consumption trends. 

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