We’re in a go-slow growth economy, but there is no danger of excesses on the horizon. Indeed, the slow growth of the American economy will continue without any immediate sign that it could end in a recession.
That was the consensus of opinion among participants on an economics panel hosted by the New York chapter of the Financial Planning Association, which took place Monday in Manhattan.
“The economy will continue to grow slow, with very little chance of a downdraft for the foreseeable future,” said Milton Ezrati, chief economist at Vested. He characterized the expansion as “the slowest” and most durable of recoveries.
Still, he added that the one to two percent annual rate of growth was “too slow for our needs.”
Although agreeing with Ezrati’s argument that we are in a slow growth economy in a recovery, another economist said there is “a silver lining.”
G. Scott Clemons, chief investment strategist for wealth management at Brown Brothers Harriman & Co, said “the silver lining is that typically by this time in the economic cycle we have seen some excesses developing, yet none of them have developed at this time.” He added that there have been a few minor excesses. “However, none of them have poised systemic risk,” Clemons said.
Panelists, who said this recovery one of the longest in American economic history, agreed that the expansion is in ‘the late stages.” But it was not clear,’ added Karin Kimbrough, head of macro and economic policy at Bank of America Merrill Lynch, how long it will be until the expansion ends.
She added that she has no expectation that the economy is going to go into a recession. “People are quitting their jobs to get better ones. And that is a sign of a pretty healthy economy,” she says.
This go-slow growth economy is also the result of recent consumer behavior, Ezrati noted.
“The pattern we’ve been seeing in the recovery is the consumer will occasionally in some quarter let spending outgrow his or her income,” he said. “Then, in the next quarter, they will pull in their horns. That’s what we saw in the first quarter this year and the fourth quarter of last year.”