NEW YORK (MainStreet)These days we'll take good news wherever we can find it, and today we find it in an optimistic forecast from BNY Mellon Chief Economist Richard Hoey.
"I continue to expect a prolonged global economic expansion," says Hoey. "What tends to bring a global expansion to an end is a big upsurge of inflation sometimes caused by soaring oil prices which makes the central banks shift to an aggressively restrictive monetary policy. There's no sign of that now, and I think the result is going to be a prolonged global economic expansion."
Hoey admits that the U.S. has experienced a slower than normal economic recovery with real GDP growth hovering around an average of 2.1% since the expansion began, which he expects to continue through the end of this year. But better growth lies ahead.
"Next year, we're anticipating a faster pace of growth in the U.S. economy, probably closer to 3%," Hoey says. "Housing is doing well. Inventories have come down. House prices are rising. Residential construction is increasing. The automobiles have an aged fleet, and there is continued demand for automobiles, and especially for pick-up trucks which are used in housing." This supposed perfect storm creates an auspicious environment.
With a projection for continued low interest rates combined with the U.S. budget deficit declining faster than many analysts expected, Hoey predicts another recession is not likely in the near-term.
"We do not expect the early emergence of substantial inflationary pressures any time soon, so a shift to truly restrictive monetary policy is likely to be many years in the future," he says. "As a result, we expect the next recession in the U.S. is likely to be postponed until after the next presidential election in November 2016."