- Blackstone Chairman, CEO & Co-Founder Stephen A. Schwarzman pointed out that the chances of a US recession have been “overblown”
In a recent interview with Financial News, Blackstone Chairman, CEO & Co-Founder Stephen A. Schwarzman said that the chances of a US recession are diminishing and the forecasts of an economic downtown are “overblown.”
“The consumer economy in the US is doing extremely well,” said Schwarzman in the interview. “We have the equivalent of full employment. We have very limited immigration, and so the labor market is getting quite tight and wages are going up.”
Schwarzman’s net worth is estimated to be more than $18 billion, according to Forbes. And Blackstone’s assets under management are at about $545 billion.
Even though Blackstone is bullish on the US economy, Blackstone’s chief investment strategist Joseph Zidle is thinking the opposite. According to Markets Insider, Zidle said that the economy is currently in the “mother of all bubbles” in terms of sovereign debt and he sees other signs of an upcoming recession.
Schwarzman’s prediction is based on increases in consumer spending, a low unemployment rate, and higher wages.
“The consumer economy in the US is doing extremely well,” added Schwarzman in the interview with Financial News. “We have the equivalent of full employment. We have very limited immigration, and so the labor market is getting quite tight and wages are going up.”
Schwarzman also pointed out that for the first time since the financial crisis, wages have been going up faster than inflation “so the average worker has more money in their pocket.” But the average worker is dealing with financial strains like student loans, credit card debt, and healthcare costs so consumers will keep spending.
And Schwarzman credited the Trump administration for fueling further growth. He said that the “current government has been good for the business community and for economic confidence.” But consumers could “lose confidence” due to geopolitical issues like the trade war.
Zidle is anticipating that the next recession will be sometime between six months and two years from now.
Some of the flags Zidle cited include failures in the repo market, negative-yielding debt, trade conflicts, and a collapse in manufacturing.
“As readers may know, I’ve turned more bearish on the current economic outlook. I don’t expect a recession in six months, but I don’t think it will be as far out as two years from now, either. Readers may also know that I believe excess sovereign debt might be the mother of all bubbles. The late-August yield curve inversions force me to listen for the discordant notes of our time. The curve’s inversion won’t tell us what is wrong, only that something is wrong. The failures in the repo market, negative-yielding debt, a deeply negative term premium, trade conflicts around the world and a collapse in manufacturing all seem unrelated right now, but I don’t think they are random,” wrote Zidle in an op-ed on Blackstone’s website. “Every cycle ends with excesses. The warnings are normally subtle and usually dismissed. This cycle’s excess is sovereign debt.”
