There is no global recession without the United States, and America’s economic foundation is solid at the moment, said David Rosenberg, chief investment strategist at Gluskin Sheff & Associates Inc.
“The rest of the world cannot break loose from the grips of U.S. domestic demand, but the U.S. economy can survive a turndown elsewhere (I didn’t say thrive … survive),” he wrote in the Financial Post.
“Japan, for years the second-largest economy in the world (replaced by China in 2010), has been in recession nearly 40 per cent of the time over the past quarter-century and I don’t see that as having exerted a lasting negative impact on the good ol’ U.S. of A. — indeed, the effect was imperceptible,” he pointed out.
“Canada is the U.S.’s largest trading partner and suffered a mini-recession in the first half of the year. I didn’t see the U.S. following suit, did you?” he asked.
“The U.S. runs a trade deficit equivalent to three percent of GDP. What other country of this scale does this? That is how America shares its growth with the rest of the world,” he said.
As evidence, he said investors should look at weekly jobless claims – and not the monthly BLS nonfarm jobs labor report – as a recession barometer.
“It is likely highly significant that filings for unemployment insurance in the first week of October fell 13,000 to 263,000, flirting with 42-year lows. The four-week moving average fell 3,000 to 267,500 and is 10,000 lower than it was a month ago,” he said.
“Why talk about this? Because recessions do not typically start until claims hit the 400,000 mark. And does anyone have a clue how long it would take to get there from where we are today, even assuming claims have hit a trough? More than two years, if history can be used as a guide.”
But other prominent economic experts see a darker economic future for the U.S.
For example, Carlyle Group LP’s David Rubenstein said the U.S. will probably enter a recession in the next three years.
"At some point in the next year or two or three, you can expect a recession," Rubenstein, the co-founder of Washington- based Carlyle, said recently in a Bloomberg television interview.
“We tend to have recessions every seven years, more or less, in the U.S. since World War II. It’s inevitable at some point.”
The U.S. economy will probably grow 1 percent to 2 percent this year, Rubenstein said. It expanded in the second quarter more than economists had previously estimated amid bigger gains in consumer and business spending. Gross domestic product rose at a 3.7 percent annualized rate, government figures showed in August, exceeding all estimates of economists surveyed by Bloomberg.
"It’s not here now,” Rubenstein said of recession signs. “It’s going to be modest growth for a while."
In addition, Citibank Chief Economist Willem Buiter
warns there is a 55 percent chance of a global recession sometime in the next two years, most likely starting in the latter half of 2016.
But some wonder if all the doom and gloom isn't a self-fulfilling prophecy.
"If we're not careful, we're going to talk ourselves into a recession," Pierre Sarrau, deputy chief investment officer, multi-asset strategies, at Blackrock in London, told Reuters.
"There are signs we're returning to growth. It's a highly uncertain environment though."
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