The U.S. economy is enjoying its ninth year of recovery, the third-longest in history, and the streak should become the second-longest by April, according to Jim Glassman, head economist for commercial banking at JPMorgan Chase & Co.
Glassman spoke to local bankers and investors Thursday at the Baylor Club.
He outlined several reasons the U.S. economy will grow between 3 and 3.5 percent over the course of 2018, which is faster than the estimated 2.8 percent in 2017. He said U.S. exports to developing economies will accelerate, energy prices are stabilizing and household net worth is “being driven to record highs” by a bullish stock market.
The bottom line is increased consumer spending, he said.
During an interview before his talk, Glassman, who is based in New York, said he has been traveling the country to gauge the pulse of people from Portland, Oregon, to Biloxi, Mississippi, Phoenix, Arizona, and now Waco.
“What I’m hearing is music to the ears of an economist,” Glassman said. “Employers are having a hard time finding people and retaining them. These are merely economic growing pains. The jobless rate is back to desirable levels, which can impact spending, but inflation is not overheating. I’m not seeing the things that would make me worry.”
Expanding economies in China and India represent opportunity, not reason for concern, Glassman said. An information packet he provided indicates completion of the widening of the Panama Canal will direct more trade flows from Asia to the U.S. through Gulf Coast and Eastern Seaboard seaports.
“As a result, Houston will benefit from this important gateway to international economies as global activity continues to strengthen,” the packet states.
Houston’s recovery from Hurricane Harvey “will provide an added spur to the region’s economy for the next year or so,” he said.
Asked about President Donald Trump’s threat of tariffs on steel and aluminum, Glassman said he does not necessarily see that as sparking a trade war.
“Japan probably thinks that is Trump’s way of negotiating,” he said. “He and much of his administration are business oriented, much more so than previous administrations. Why would it do something to roil the business community?”
Glassman said curtailment of regulations and tax cuts will go a long way toward instilling confidence in business and industry leaders.
“Most corporate taxation is borne by workers,” he said.
Glassman said he finds it perfectly reasonable that employees will benefit from a reduced corporate tax burden in the form of higher wages or increased training. In a tight job market, employers will not want to risk losing staffers, he said.
With the jobless rate hovering around 4.1 percent, some believe the nation is near or at full employment. But Glassman said he believes “there is still some slack in the U.S. economy,” otherwise the Federal Reserve would be more aggressive in raising interest rates.
He said some of the credit for the purring economy rests with President Trump, “but it involves more than one person.” He described Trump as “an interesting person,” who won the election, in part, because he tapped into the sentiments of people in the Rust Belt, the upper Midwest, who have seen the loss of 8 million manufacturing jobs in recent years.