So says Capital Economics' Chief US Economist, Paul Ashworth. More key take-away's from yesterday's Capital Economics Annual Conference:
Monetary Policy (US):
With a caveat on the recession date: Paul Ashworth said 2019 with tax reform, 2nd half of 2018 without it.
Interestingly, there was little mention of the record amounts of US household debt, which with three 1/4% interest rate increases, should have an impact on the consumer with an increasing cost to servicing their debt.
My take was that they (Capital Economics) expect that the consumer will remain capable of spending by saving less: with improving household wealth (housing price increases and equity market strength) as well as further job growth expected to lead to higher incomes (but not yet, in the most recent data, anyway).
I will let the experts debate the possible outcomes, but I would suggest that herein lies some pretty significant risk that may be impactful on future consumer spending (US consumer is 2/3 of the US economy) and US economic growth outside of the political issues.
As always, our job for our clients (at High Rock) is to identify risk, assess it and build investing strategies around it. That is not something you will get with a "buy and hold" or "Robo" portfolio structure.
All this and more to be discussed on our weekly client webinar today, the recorded version which we will post on our (High Rock) website at or about 5pm EDT.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist