Economist says U.S. recession is "a ways away"

McKENZIE DELISLE/STAFF PHOTONBT Wealth Management Chief Investment Officer Kenneth Entenmann speaks to NBT officials and clients at a recent talk in the West Side Ballroom. Entenmann stopped in the Town of Plattsburgh during his annual speaking tour, discussing the United States’ economy and an eventual recession.

PLATTSBURGH — The U.S. is experiencing its longest run of economic recovery and Kenneth Entenmann says it has left many waiting for the other shoe to drop.

NBT Weath Management's chief executive officer said ever since 2009, following The Great Recession, the United State's economy has been expanding. 

"There is this general sense that we're due," Entenmann said of the nation's perception. "We've had 11 years of economic expansion, so, we have to have a recession — we're due."

While Entenmann said an economic decline would make its way eventually, he thought it wrong to believe the current period of expansion would "die of old age." 

"We're actually in pretty good shape from an economic standpoint right now," he said. "I don't think that the U.S. economy is likely to go into a recession imminently.

"I think it's probably going to stay away for a while."

MAD, MAD, MAD WORLD

Entenmann has a bachelor's in applied economics and business management from Cornell University and earned his MBA from William E. Simon Graduate School of Business Administration at the University of Rochester.

With his 30-plus years of investment experience, Entenmann goes on a speaking tour each fall for NBT Bank.

This year, the bank's chief executive officer made a stop in the North Country, talking with NBT clients and professionals at the West Side Ballroom in the Town of Plattsburgh. 

Entenmann spoke on interest rate normalization, trade wars and global economic growth, but started by comparing reality to the 1963 film, "It's a Mad, Mad, Mad, Mad World."

"Everywhere I go this year, there seems to be a common theme of, 'This is a crazy world we're living in. Everything is topsy-turvy,'" he said. "If you look at today's world, it really is a mad, mad, mad, mad world.

"We have 24/7 media coverage that just amplifies everything — particularly if its negative." 

Yet, he added, the stock market was up 20 percent and interest rates, inflation and unemployment were all down.

"That's a lot to be happy about," he said. 

RECESSION CATALYSTS

So what does kill a period of economic expansion? 

With a glance at American history, Entenmann said, the nation has headed into recession following macro events. 

"Like natural disasters that take out large swaths of the economy and slow things down," he said with mention to Hurricane Katrina. "Those, by definition, are unpredictable." 

Other unpredictable catalysts have included not-so-natural disasters like the Attack on Pearl Harbor or the September 11 Attacks.

But, he added, recession catalysts could be things like the Federal Reserve's monetary policy or asset bubbles.

Earlier this year, President Donald Trump took grief after he said the Federal Reserve was his greatest enemy. 

"That's a pretty bold statement," Entenmann said with a laugh. "If you look at the list of enemies that Donald Trump has — that's a long list. For the Federal Reserve to make it to number one is pretty impressive."

Nonetheless, the economist added, there was some truth to Trump's statement. 

"Historically, monetary policy is one of the major causes of economic recessions," Entenmann said. 

ASSET BUBBLES

Entenmann said asset bubbles were something to keep an eye on when making recession projections. 

"If you look at the United States and our last two major recessions, they were preceded by asset bubbles," he said. 

Like in late 1990's to the early 2000's, when major adjustments came with the internet. 

"You had the dot-com bubble in stocks," Entenmann said. "That burst in March of 2001 led to a very deep recession through 2003." 

Or the housing bubble in 2007, he added. 

"When that bubble popped, we went into a very deep financial crisis," he said of The Great Recession. 

Entenmann said he's been on the lookout for those economic bubbles. 

"My conclusion is, I don't see any," he said. "Not anything of material anyway." 

'A WAYS AWAY'

And looking beyond the price of assets, Entenmann thought other factors supported the economy's continued expansion.

Unemployment was at a record low and wages, in the lowest income category, have been on the rise, he said. 

"If you have that combined with very low, or benign inflation — that's a pretty powerful recipe," he said. 

Plus, he added, those factors increase consumption levels.

"That constitutes nearly 70 percent of the economy," he said. "I find it hard to fathom that we're going to suddenly go into a recession.

"I think we're probably OK for at least the next six months." 

Entenmann said, should there be an unemployment slowdown, that would be a concern. 

"As we talk about economic recession, I think it's a ways away," he concluded. "I will make a prediction that we will have another recession, but I just won't tell you when.

"When? How? Why? I have no idea. Of course there will be another recession. That's the cyclicity of things."

 

Email McKenzie Delisle: 

mdelisle@pressrepublican.com

Twitter: @McKenzieDelisle

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