This summer, our current economic expansion turned 10, the longest ever recorded—a 120-month-plus slo-mo rebound from the Great Recession that’s added more than 20 million new jobs and, according to The Wall Street Journal, increased the net worth of U.S. households by a staggering $47 trillion since 2009.
Happy birthday? Not so much. When we polled CEOs in August, uncertainty was on the rise. An increasing number of leaders are now planning to pump the brakes on both capital spending and hiring in the months ahead. The biggest worry rhymes with Smariffs, but that’s hardly the only concern. All would make surprisingly great high-school garage band names: Late In The Cycle. Bad Brexit. Korean Aggression. Impeachment. Green New Deal. Strait of Hormuz. Ladies and gentleman, please welcome…ELIZABETH WARREN AND THE REGULATIONS!
In late July, the Fed cut rates for the first time in over a decade, “in light of the implications of global developments for the economic outlook as well as muted inflation pressures.” Fed speak for “uh-oh.”
Four Contrarian Thoughts
Amid this darkening mood, allow me to toss out a few points:
One: Unlike streaks in baseball or Jeopardy, economic expansions don’t just tire out and stall. According to research by Glenn Rudebusch, an economist at the Federal Reserve Bank of San Francisco, a recession is no more likely to hit in the tenth year of an expansion than it is in the fifth year. So, theoretically, good times—or not-so-bad-times—can last forever, unless we talk ourselves into a recession or someone does something really stupid (always a possibility—see above).
Two: At least one very sharp China hand I talked with this summer had an optimistic case on trade worth sharing. Nick Pinchuk, CEO of toolmaker Snap-on, has decades of experience operating in China, and he’s betting on a Xi-Trump deal—some kind of deal—just after the 50th anniversary of China’s revolution in October and (shocking!) just in time for the 2020 U.S. campaign to ramp up. Here’s hoping Nick is right.
Three: While our polling of CEO confidence has slumped since The Christmas Of The Great Tax Cut, confidence remains—at least by historical measures—in “good” territory. Along with everyone else, CEOs have been predicting a slowdown to start in about 18 months for almost two years now. And still things are pretty good.
Four: The current moment reminds me of what my first mentor, a wonderful, generous New York Times editor named Jack Lynch, used to tell me while we were covering the dot-com bubble and the ensuing bust. Whenever I pegged a company’s stock movement to some ephemeral geopolitical shock or talked about The Stock Market as if it was some monolithic thing, Jack, who recently passed away, would chide me for being intellectually lazy. “It’s a market of stocks, Sunshine,” he’d say. “Not a stock market.” It’s a good reminder for uncertain times like these: Every company—and every CEO—gets to have a say about its future, no matter the news. Thanks, Jack.