60 seconds on what could derail the US expansion

The US economy is about to reach a landmark - it’s about to experience the second longest expansion in economic history. That would be cause for celebration, particularly when we think back to the dark days of the global financial crisis. The question now though, is how long can that recovery carry on?

Several factors have derailed recoveries in the past: imbalances in the economy, inflation, big shocks from outside, but at the moment, balance sheets in the US look pretty good so we don’t think that will cause a problem. Inflation is picking up though, and we see interest rates having to rise to counter that, but I think that’s going to be a worry for further out; perhaps at the end of 2019 or 2020.

The most immediate worry is trade wars. Trade wars could cause a sharp disruption in the US economy. We see the current threats from the US as being part of a bargaining strategy to get more concessions from China. If we’re right, the US economy could carry on and grow, and by the end of next year we could be looking at the longest expansion in US history.