Investment guru Byron Wien warns market players that there are a few years left before the seemingly endless bull-run stock rally ends and the nation plunges back into another recession.
“My view is the earliest we’re going to have a recession is 2021,” he told CNBC. He doesn’t expect anything more severe than a 10 percent stock correction before recession hits.
Typical recession omens such as poor corporate earnings and employment data, “just aren’t in place,” said Wien, a vice chairman at Blackstone.
“Maybe they’ll develop very quickly. But usually, they take a while,” he continued. “Right now I see this cycle going on for a couple more years. And as long as that is the case, I think volatility will remain low,” he said.
The current recovery, which began in mid-2009, is the second longest expansion in U.S. history, and would become the longest if it lasts past June 2019, CNBC explained.
Wien isn’t alone in warning about economic troubles on America’s horizon.
Earlier this week, a group of top business economists believes the major tax cuts President Donald Trump pushed through Congress will give a significant boost to economic growth this year and next year. But they worry that by 2020, the country could be entering a new recession, the Associated Press explained.
The National Association for Business Economics says in its latest quarterly outlook that its panel of 45 economists expects the economy, as measured by the gross domestic product, to expand 2.8 percent this year. That is down slightly from the panel’s March forecast, which put GDP growth this year at 2.9 percent.
The NABE economists are “slightly less optimistic about the U.S. economy in 2018 than they were three months ago,” says NABE vice president Kevin Swift, chief economist at the American Chemistry Council.
Part of the drop-off in optimism reflects growing worries about what Trump’s get-tough approach on trade might do to U.S. growth prospects.
Meanwhile, Trump’s chief economic adviser argues that last week’s blockbuster unemployment report is a sign of the robust economic growth awaiting America.
“I believe we’ve entered into the longest largest prosperity in a couple of decades. I know it’s early in the game,” Larry Kudlow, director of the White House’s National Economic Council, told CNBC.
To be sure, U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions, which could stir concerns about inflation, Reuters explained.
Nonfarm payrolls increased by 223,000 jobs last month as warm weather boosted hiring at construction sites. There were also big gains in retail and leisure and hospitality payrolls. The economy created 15,000 more jobs than previously reported in March and April.
“This is a prosperity era. It’s a strong economy. What you’ve got here is continued job growth, low unemployment, and participation rates pretty good,” said Kudlow, who served as the Trump campaign’s senior economic adviser.
The strong employment report added to a string of recent upbeat economic data, including consumer spending and industrial production, that have suggested economic growth was regaining speed early in the second quarter after slowing at the beginning of the year.
The strength comes even as the stimulus from a $1.5 trillion income tax cut package and increased government spending is yet to filter through the economy.
(Newsmax wire services contributed to this report).
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