Daniel Island economist Stephen Slifer predicts increased consumer spending, increased business investment spending and potential tax cuts will equal continued economic growth for the U.S. economy in 2018.
“My job is to try to find the point and time where this (economic growth) is all going to crumble,” Slifer said at his 2018 Economic Outlook Conference at the Daniel Island Club. “And you know what? I don’t see it yet. ... I think it’s got legs, I would suggest another three years, five years — who knows?”
Slifer runs the website NumberNomics, which aims to explain economic trends. He said the current period of economic expansion in the U.S. will go into the history books as the longest on record if growth continues.
“The current recordholder is the decade of the ’90s,” he said. “It lasted exactly 10 years. We will reach that landmark in June of 2019, and we keep saying this thing is going to keep going until 2020, 2022, 2025 — pick whatever number you want — this is going to smash the previous records.”
He said that growth is also picking up around the world because of economic stimulus in the United States, such as possible tax cuts; monetary policy in the United States, Europe and Japan; and increased oil prices.
“Growth is picking up, depending on where you look, for different reasons, but ... this is the first time we will have had growth accelerating around the globe since the recession,” he said. “It used to be just the U.S. growing, everybody else was kind of lackluster, but this is different.”
Slifer also pointed out that the U.S. economy has entered recessions only when the Federal Reserve, the central bank of the United States, has raised its federal funds interest rate higher than 3%, which is considered the neutral rate. The funds rate is current between 1% and 1.25%, and economists predict only incremental increases in the next 12 months.
“They (the Fed) are proceeding really, really slowly, and if they start to find that ... things started to slow down, they’re going to stop,” Slifer said. “They’re smart people.”
He added that 3% has historically been the neutral rate — but that could change as the economy changes, and it’s one of the reasons the Federal Reserve is proceeding cautiously.
Slifer said the Tax Cuts and Jobs Act will provide a boost to the economy if it comes to fruition. The House and Senate are currently working to reconcile a final version of the bill.
“It’s got effects on all sorts of different stuff. ... It’s going to boost investment spending, GDP growth, has implications for inflation, the Fed, productivity,” he said. “Lots of good things will happen if we get these tax cuts.”