Advertisement
Features

A Gary Shilling: we're already in a recession – but the future is bright

Author and strategist A Gary Shilling says the US economy is declining. But a recession won't last, and things are looking good in the longer term.

Gary Shilling, president of the economic research firm A. Gary Shilling & Co. © Jonathan Fickies/Bloomberg via Getty Images

Gary Shilling, president of the economic research firm A. Gary Shilling & Co. © Jonathan Fickies/Bloomberg via Getty Images

A Gary Shilling, president,A Gary Shilling & Co

"I think we're probably already in a recession." In his 2010 book, The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation, author and strategist A Gary Shilling correctly forecast a long stagnation following the 2008 crisis. Now, he tells Ed Harrison on Real Vision, "there's just a whole host of economic indicators that are declining."

Advertisement - Article continues below

That said, we're not facing anything to compare to previous "really outstanding crises". There are lots of potential problems around: "corporate borrowing has been very heavy" in the US; and over-indebted emerging markets could also struggle given the strength of the US dollar, which "makes it much more expensive in terms of local currencies to pay for those dollar debts." Finally, there are trade wars with China. Yet while any of these issues "might blow up", says Shilling, "I don't see those as big bubbles."

How will that affect markets? Yields on US Treasuries (government debt) will fall even further (and thus the price of bonds go even higher), says Shilling. He reckons the ten-year Treasury yield will fall as far as 1%. Also, it'll make the 2020 election "very interesting", because "when times are bad, any incumbent is at risk."

However, Shilling is more upbeat in the long run. Advances in technology mean "we probably are going to see tremendous productivity growth in the future." Coupled with low inflation, that could see "real GDP grow 2.5%, 3%... So, I think it could be a pretty bright future there."

Advertisement
Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/517688/the-british-equity-market-is-shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Visit/516944/why-wall-street-has-got-it-wrong-again
Economy

Why Wall Street has got the US economy wrong again

The hiring slowdown does not signal recession for the US economy. Growth is just moving down a gear, says Brian Pellegrini.
25 Oct 2019
Visit/511212/reasons-for-investors-to-be-bearish-but-stick-with-the-stockmarket-bulls
Stockmarkets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019

Most Popular

Visit/investments/commodities/industrial-metals/601401/money-printing-infrastructure-base-metals-copper
Industrial metals

Governments’ money-printing mania bodes well for base metals

Money is being printed like there is no tomorrow. Much of it will be used to pay for infrastructure projects – and that will be good for metals, says …
27 May 2020
Visit/investments/investment-strategy/601389/are-you-a-permabear-three-red-flags-to-watch-out-for
Investment strategy

Are you a permabear? Three red flags to watch out for

Contrarian investors are often seen as bearish because the market tends to go up over time. But if that bearishness goes too deep, you risk seriously …
26 May 2020
Visit/economy/eu-economy/601422/heres-why-investors-should-care-about-the-eus-plan-to-tackle-covid-19
EU Economy

Here’s why investors should care about the EU’s plan to tackle Covid-19

The EU's €750bn rescue package makes a break-up of the eurozone much less likely. John Stepek explains why the scheme is such a big deal, and what it …
28 May 2020