by Peter Jones, CFA
Vice President of Research
Ferguson Wellman Capitol Management, Oregon
As the U.S. expansion draws closer to becoming the longest on record, a number of economic and political risks have emerged or intensified in recent months, leading to global equity market weakness. This has investors, economists and pundits considering when we will endure the next U.S. recession. While we are not dismissing these risks and believe economic growth will be slower domestically in 2019, we continue to see a solid U.S. growth outlook with minimal recession risk in the near term.
Lately international economies have slowed more than expected, especially in China. At the same time, the U.S. Federal Reserve continues to raise interest rates at a slow, but steady pace. Prior business cycles have always ended with the Fed on a tightening path.
On the political front, trade friction and tariffs between the U.S. and China continue to dominate the headlines, creating a significant amount of uncertainty for multinational corporations. Further, Brexit is top-of-mind for global investors and, with little progress being made, the chances of a “no-deal” Brexit is rising. Lastly, the Italian budget plan looks to put the nation into a dangerous fiscal position.
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