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Economist: Growth likely to persist

Written on May 1, 2020

By Gary Hunt, CAE, OSCPA Communications Director

AyersBPeriods of economic expansion don't last forever, but the one underway now in the U.S. will persist for at least the next year or two, Nationwide Senior Economist Ben Ayers said Friday.

Ayers presented a mostly sunny economic forecast on a cold, rainy morning at the Columbus Accounting Show. The 150+ CPAs and accounting professionals in attendance seemed to validate his observations about the current state of the economy, as – by a show of hands – they indicated that jobs are plentiful and they don't expect a recession until 2021 at the earliest.

Ayers noted that the economy is entering the 10th year of its expansion.

"If we have growth through June of next year this will be the longest expansion in U.S. history, and that's what we think is going to happen," he said. "... Go past two years from now and, well, we'll see."

He said monetary policy is a better leading indicator for an economic downturn than stock markets. It's also important to be aware of geopolitical issues, such as immigration and tariff disputes. The latter issue, in particular, has the potential to slow things down but has not done so yet “because the US is relatively insulated from trade.”

Other points Ayers discussed included:

  • Jobs are plentiful, and wage gains are steadily building.
  • Auto and home sales remain high and are likely to plateau within the next year.
  • The Tax Cuts and Jobs Act will spark small business growth over the next two years.
  • Inflation has been slow, so the Federal Reserve has been raising rates slowly. One more rate hike is expected in December. “The Fed has been much more protracted with their rate hike cycle than they have been in the past,” Ayers said. “Hitting 4% in 2020 is probably about the peak. Unfortunately, that gives them less leverage in the next cycle when there is a downturn.”
  • The stock market correction in October was “overdue and needed… I will punt a little bit and say that depends on the sector,” he added. “There are always segments that are undervalued.”