Submitted by Taps Coogan on the 12th of November 2018 to The Sounding Line.

Evercore ISI Chairman Ed Hyman, one of the fathers of modern market research and perennially ranked as one of the most respected institutional economics advisors in the world, recently spoke with Bloomberg’s Guy Johnson to express his view that, despite a volatile year and lots of headline risk, the US is still years away from a recession.

Mr. Hyman:

“I have a chance of studying economics factors and coming up with the most likely date for a recession which, let’s just say, is years out… I meet with investors constantly. This is not a topic that I get a lot of push-back on. People are now beginning to think that this is a ways out and some of the factors that argue for that, as an example, would be that once the growth in earnings peaks, S&P earnings which peak around 25% or 30%, the recession is two or three years out after that. And once hourly average earnings start to go up, they hit 4% and then you get a recession, and right now they’re at 3%. So, I think the economy today is quite good… I think it will slow next year to something like 2.25% and then it will just keep going, and I’ll monitor that every day.”

Guy Johnson:

“…Usually it’s the Fed that breaks the economy right, and then you get a recession that follows on from that, you get an inverted yield curve…? Where does the Fed stop, because there’s a bunch of other people out there that are talking about a recession in 2020… and they see the Fed stopping before that.”

Mr. Hyman:

“…The Fed does not want to precipitate a recession in 2020 and they know that there is… a fiscal cliff or the fiscal stimulus falls off a lot in 2020. So, I think they might do a better job of communicating that they will be data dependent as opposed to being on a march toward raising interest rates. But it’s a dynamic situation and one of the examples of that is this big drop in oil in the past couple of months that changed the inflation picture… They’ll be watching the data and if it’s a little bit weaker and inflation is low they could easily take a breather…”

While the idea that a recession is several years out might very well be a contrarian opinion at this point, it is certainly worth contemplating. There is more to the interview, so enjoy it above.

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