BLOOMINGTON, Ind. –A blank slide was all FTR’s economic expert Bill Witte could offer up to show potential upside factors to the US economy, when presenting during a State of Freight Webinar October 8.
“I tried hard to find something to put on this slide. I couldn’t come up with much of anything,” Witte joked.
He did, however, have four downside risks to discuss. They included: an international economy that’s in flux, with further slowdowns in China likely; an uncertain monetary policy in the US, which is clearly doing nothing to stimulate the economy or encourage long-term growth; bad fiscal policy in the US, especially as it relates to corporate taxation; and regulatory overreach, which is hurting the economy in the pursuit of social benefits.
Still, despite having more concerns than reasons for optimism, Witte said a US recession is not likely imminent.
“Nothing right now indicates the likelihood of recession,” Witte said. “But in my model, this recovery continues all the way through 2019 with the kind of growth we’ve seen, and that’s unlikely. I think we’ll have something that produces a recession sometime in the next three years but the timing of it is totally opaque, impossible to predict, and the nature of the recession right now is impossible to predict. I don’t see a lot of imbalances in the US economy now except for in the financial sector, and ordinarily recessions happen because of some kind of imbalance that has to correct.”
But the economy is currently very difficult to predict, Witte admitted. The “new normal” seems to be economic growth at an underwhelming clip of about 2.2%. Witte is expecting more of the same for 2016, and the same goes for employment numbers, with the unemployment rate remaining at about 5%.