One of the key topics of debate for 2020 focuses on the likelihood of the U.S. entering a recession in the coming months. David Rubenstein, co-CEO of private equity behemoth The Carlyle Group offered his take in a CNBC interview.
President Trump Can’t Brag About Economy
U.S. President Donald Trump touted his economic accomplishments at A Tuesday World Economic Forum speech. Rubenstein mostly agrees and said the U.S. economy is in “really good shape” and Trump has reason to celebrate.
But borrowing a famous quote from American professional baseball pitcher Jay Hanna “Dizzy” Dean, Trump can’t be seen as bragging because he delivered on his promise of economic expansion, the multi-billionaire said in the interview. As the quote goes: “it’s not bragging if you can do it.”
Granted, the U.S. economy isn’t expected to remain as strong as it is today indefinitely but Rubenstein said he sees zero reasons to suggest a recession is on the horizon. Economic conditions will remain equally as strong in 2020, including low levels of unemployment.
“There’s virtually no economy in the world that wouldn’t like [to have] the U.S. economy,” he said.
Challenges And Threats
One of the biggest problems facing the U.S. economy is the national debt which stands at $23 trillion, Rubenstein said. At current levels, the debt is “manageable” but could become problematic if interest rates rise.
Income inequality and the lack of social mobility is a broader problem which impacts society and needs to be addressed, according to Rubenstein. The people at the very bottom of the economic ladder aren’t “rising up” and this could be due to problems in the education system. For example, approximately 14% of Americans can’t read above a fourth-grade level.
No ‘Phase Two’ Trade Deal Anytime Soon
Rubenstein was nearly spot-on when he said last August U.S. and China would sign the “Phase One” trade deal within four months. But now he is saying a completed “Phase Two” deal prior to the 2020 Presidential election is not going to happen.
The next round of trade talks is “too complicated” to be finalized in months and will require a year or two of talks. Some of the items on the table would require radical shifts in China’s economic policies which are“not that easy to do.”
Regardless, the success story in bringing the two sides together to sign the “Phase One” portion will reduce global tension. Rubenstein said he observed this first-hand after meeting with China’s Vice-Premier Han Zheng.
“Whether we get ‘Phase Two’ done in a year or two — I don’t know,” he said. “But we aren’t going to have the tensions that we had before on economic matters.”