Only a handful of financial minds have forecasted a recession in the United States, including Peter Schiff, Marc Faber and Jim Rogers – some even say the U.S. is actually still in a recession.
According to Jim McCaughan, Principal Global Investors CEO, a recession is “probably three years away.” Although he believes the February jobs report was great, he doesn’t seen the party lasting long enough, citing the supply side.
“I think that the job data confirm what we’ve been seeing from client data, which is jobs are increasing and pay is beginning to increase,” McCaughan told CNBC. “I think it’s only a matter of time until pay rises come through in the economy, which will be quite stimulative.”
The element McCaughan is concerned about is the output declining significantly. In fact, he only sees another two years of decent economic growth before another downturn transpires.
“The runway may be shortening. It’s a very good recovery this year, but maybe only another two years or so of decent growth in the economy before you get supply-side constraints,” McCaughan posited. “You know, the next recession is probably three years away.”
Thoughts
It’s hard to forecast these things because the Federal Reserve has thrown so much money at the problem that it’s difficult to see just how many FRNs have been funneled throughout the entire economy. The United States central bank is a secretive and clandestine organization so how much money has exactly been printed remains a mystery.
Another full-blown financial crisis is likely on the horizon. When that happens is anyone’s guess. With trillions of dollars in debt, $100-plus trillion in unfunded liabilities and expenditures, rampant price inflation and a worthless currency, who could exactly be betting on the U.S. economy in the long-term?
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