Expectations are critical, and if most people expect little from the economy, they may well get what they ask for. 

The next recession may be years away or right around the corner. But global growth remains anemic and fragile. At the same time, uncertainty, ranging from a potential Brexit or European banking crisis to the U.S. election, is undermining business confidence, sparking renewed concerns that one unexpected event could cause a new downturn. 

The probability of enough soft economies in both developed and emerging markets collectively turning negative still appears unlikely, but many key economic indicators, including U.S. employment statistics in April and May, are raising real questions about the next recession. “Everything looks like it sucks because it does,” said Geopolitical Futures’ George Friedman in late May at John Mauldin’s Strategic Investment Conference.

Such melancholy sentiments are pervasive seven years into the weakest recovery and least-loved bull market in modern memory. Yet at Mauldin’s conference, a group of leading economists—including Gary Shilling, Lacy Hunt, David Rosenberg and David Zervos—discussed the slow-growth predicament and none were predicting an outright recession on the horizon anytime soon.

Rosenberg, contacted after May’s miserable unemployment report, maintained that a U.S. recession was probably years away. “You don’t get recessions until the output gap is eliminated and we move to an excess demand environment that triggers a monetary shock,” the chief market strategist of Gluskin Sheff in Toronto contends. “History says it will take five or six years for this condition to surface.”

Calling Rosenberg an optimist, as some at Mauldin’s conference did, borders on the preposterous. “Nothing is more pathetic than that the stock market still looks to Janet Yellen to ride to the rescue,” he told attendees.

In America, capacity utilization stands at 75% and the Fed has never raised interest rates when it stood below 78%. If a recession remains far away, Rosenberg considers the bull market in equities over and mired in some sort of purgatory, where it could continue to drift sideways like it has for almost two years. 

In a world where safe yields are scarce, dividends should keep a floor under equity prices. It’s a sign of the “topsy-turvy” times that people are buying stocks for income and bonds for capital gains, he noted.

Gary Shilling, like Rosenberg a former Merrill Lynch chief economist, and a man who can boast that he may be the only person fired twice by former Merrill CEO and Treasury Secretary Donald Regan, described his outlook as equally subdued. “It’s realistic, not bearish,” he said.

Shilling, who has run his own eponymous economics consulting firm for decades and predicted the housing crash, said that for the economy to snap back and return to rapid growth it will require some kind of spark driven by new technologies. That’s unlikely to happen until deleveraging advances.

On this front, Shilling actually offered a positive note. Household debt today stands at 105% of GDP, above its norm of 65% but significantly below its 2007 high of 130%.

Shilling and Rosenberg both pinpointed weak income growth as the chief culprit causing our current malaise. “Slower economic growth is affecting incomes, as has cost-cutting, and there is little unit growth or pricing power [for businesses],” he explained. That is now showing up in declining profit margins.

Throw in the demographic problem of baby boomers being forced to save with negligible income increases and it’s obvious to see why growth remains so slow. The labor force participation rate declined from 66.4% in January 2007 to 62.6% last month. Shilling attributed 60% of that decline to aging boomers retiring; the other 40%, he said, were discouraged workers throwing in the towel.

But Shilling is no orthodox Malthusian gloom and doomer. He urged advisors to short commodities and oil and buy long-term Treasurys and the U.S. dollar. “Commodities are not a long-term investment,” he said. “Human ingenuity beats shortages any day.”

Another advocate of long-term Treasurys was Lacy Hunt, executive vice president at Hoisington Investment Management Company and a former top economist at the Dallas Fed. At the start of this century, Hunt argued the U.S. faced several problems. Chief among them were too much of the wrong kind of debt and too little economic activity to sustain our standard of living.

“Now we have another problem; the rest of the world has too much debt and the quality of debt is deteriorating,” Hunt said. “Debt can provide transitory gains,” but that is all in his view.

Compounding the problem is the debt sustainability issue. Ever-expanding debt levels are being built into the equation and, like expansionary monetary policy, each round of debt increases proves itself more impotent in jump-starting the economy than the last round. “The [Congressional Budget Office] sees it growing at $1 trillion a year for the next decade,” Hunt continued. 

If that weren’t enough, it’s the wrong type of debt to finance daily living needs, in his view. The good news is that the U.S. will outperform China, Japan and the euro zone, partly because it has less debt.

Hunt and Rosenberg concurred that corporate capital allocation policies were doing nothing to help growth. Capital investment has been the biggest drag on the economy, and it is retrenching again, Rosenberg said.

Business debt is about 70% of where it was in 2007, but the problem is what companies are doing with their capital. “Companies buying back shares does nothing to improve the aggregate growth of the economy,” Hunt argued. 

All the economists agreed with the conference host, John Mauldin, that excessive reliance on traditional monetary policy options was becoming an act in futility. It is “asymmetric, creates distortions and transfers wealth to the rich,” Hunt said, adding that a so-called “helicopter drop,” or a move to negative interest rates, discussed by some could require a rewrite of the Federal Reserve Act.

David Zervos, chief market strategist at Jefferies, had a more radical solution. “I don’t know why we’re doomed,” he said. “We’ll monetize the debt.” 

Schemes to monetize are suddenly entering the conversation, however outlandish they may sound. One goes like this: There are about 320 million Americans and the Fed has, say, about $4.8 trillion in Treasury securities. So why can’t it send every citizen a check for $15,000 and eliminate a huge amount of government debt? 

Many think it would establish a terrible precedent for future irresponsibility and moral hazard, while serious scholars like Hunt suspect it is illegal. Then again, the legality of TARP and other aspects of the various bailouts during the Great Recession have been questioned.

When the topic switched to fiscal policy, opinions diverged. Rosenberg suggested that the upcoming presidential election might mean more federal government stimulus in infrastructure, which he viewed as necessary. Both presidential candidates, Donald Trump and Hillary Clinton, have called for it.

Rosenberg was highly critical of President Obama’s first chief economic advisor, Larry Summers, and his advice to “play small ball” with the stimulus in 2009. “We haven’t achieved escape velocity like Summers said in 2010,” he said. Indeed, three years later, Summers went on a tour to discuss his theory of secular stagnation.

For his part, Hunt was as skeptical of fiscal policy as he was about central bank gimmickry. “Fiscal policy options don’t exist because there is no way to pay for them,” he declared.

In graduate school, Hunt was taught that the multiplier for government spending was 5, or $5 of GDP growth for every $1 spent. His own research decades later concludes it is more 0.1, or minus 10 cents for every dollar spent. Since this current seven-year economic expansion began, the national standard of living is down 4%, he added. Over the same seven years, Japan has suffered four recessions.

Come the next recession, Shilling agreed with Rosenberg that there would be loads of fiscal stimulus. What form might it take?

Rosenberg pronounced trickle-down economics a “big failure” and said there should be a redirection of taxes, cutting them for people with a 90% marginal propensity to consume (MPC) and raising them for super-wealthy folks with a 30% MPC. Given the state of the middle class and their need to save more, it’s hardly a certainty that they wouldn’t save funds from a tax cut, or at least pay off their debt.

Moving to a negative interest rate regime, the way Japan and many euro zone nations have done, was roundly condemned by the group as a potentially destructive option. “Negative interest rates would put money market funds out of business,” predicted Hunt, adding that the unfunded liabilities of banks and credit unions would also soar right through the roof.

Aside from their deleterious impact on savers, negative interest rates are also a tax on bank reserves. Given that their principal reason to exist is to create credit, charging depositors acts as a serious deterrent to lending.

Policymakers in governments and central banks are running out of options, but were they ever the answer? “Prosperity is achieved by creativity and hard work,” Hunt said. 

And are things as bad as the clueless dismal scientists think or is the hangover from the Great Recession still lingering? The total number of Americans collecting unemployment benefits stands at 2.1 million, down 7.5% from a year ago and at its lowest level since 2000.

That only serves as a reminder that 2000 seems far more distant than a mere 16 years. Unlike that era when euphoria was pervasive and high-earning dentists were quitting their jobs to become day traders, there are few excesses in the global economy. In a normal world, that would mean any conceivable recession in the near term would be very mild.

Perhaps the most positive indicator is the number of job openings, which the Bureau of Labor Statistics estimates at 5.3 million, an all-time high. Furthermore, the twin demographic forces of retiring baby boomers and a dramatic falloff in post-millennial Generation Z numbers are likely to produce a labor shortage over the next decade. That, in turn, could finally trigger a turnaround in workers’ incomes and standard of living.

That’s one reason business activity might actually improve before it gets worse. When the next recession does arrive, “the economy will be much better,” Rosenberg said. “There will be an excess demand environment.”