After 8 years of economic growth, what does future hold in store for NJ?
We keep hearing positive things about the economy, but there is also talk in some economic circles that we’re overdue for a recession after eight years of positive economic growth.
“Right now, it seems most of the indicators are quite positive. There doesn’t appear to be much evidence at this point that there is a slowdown in the economy,” said Maury Randall, a Rider University finance professor and former chair of the finance department.
He said usually if a recession is brewing, there will be certain signs of a problem, like weakness in the stock market, but we don’t see that right now.
“What we do see is consumer confidence, business confidence and the prospect of tax cuts. These are all things that seem to be creating a good deal of business confidence.”
Randall pointed out that the Federal Reserve doesn’t appear to be on the verge of a very severe, tight monetary policy.
“They don’t appear to be intent on raising interest rates very rapidly, which is often a cause for a recession,” he said.
“So while there’s no guarantee, it seems like most of the signals appear that the expansion will continue and maybe things will move a little bit higher in the next quarter.”
But what about the ‘what goes up must come down’ theory?
Randall pointed out even though it’s been 10 years since the last recession, it doesn’t necessarily mean we’ll have an economic contraction anytime soon.
He stressed, “When we do have a recession, usually there is some event that you can point to.”
Randall says that right before the Great Recession 10 years ago, we had a real-estate meltdown that created a major financial crisis, where many banks had approved excessive real estate loans that never should have been allowed.
“Usually there are some warning signals if you’re really going to have a significant recession. Right now things are favorable.”
He said another example of this would be if inflation began to rise significantly.
“That would signal maybe the Federal Reserve is going to clamp down more sharply. We don’t see that yet.”
Randall said the only sign of weakness right now is some long-term interest rates are not very high, about 2.3 percent. “But it’s been at that level, roughly that level, for quite a while, and yet we continue to have growth.”
You can contact reporter David Matthau at David.Matthau@townsquaremedia.com
Also on New Jersey 101.5: