MIAMI — The strong profits companies have been pocketing for the past couple of years may not be enough to have made CFOs overly enthusiastic about the economy’s mid-term outlook, but the picture is brighter than many think, according to a leading economist.
There clearly is much uncertainty ahead, allowed Gregory Miller, chief economist for SunTrust Banks, in a keynote address at the CFO Playbook for Private Companies conference on Monday. Still, “My outlook right now is generally positive,” Miller said. Despite widespread fear that a recession may be around the corner, he noted, “If you get down into the guts of what’s going on and the economic data, none of it is screaming [about] a slide into another recession.” The current economic expansion, now four years old, should last at least another two years, he opined.
Uncertainty is difficult to quantify, Miller pointed out. But, he said, “My most certain piece of advice for you is, listen to the press and enjoy the stories they tell, but depend on the data. Don’t get distracted by high-profile, low-impact events. Don’t get distracted by talking heads telling you the economy is on the verge of slipping over the edge of a cliff into an abyss.”
Two examples of high-profile, low-impact events were the federal debt-ceiling battle in Congress and the government shutdown in the first two weeks of October, according to Miller.
While much political hay was made about the economic impact of the shutdown, the actual impact was “almost imperceptible,” he said. “By the end of October it will all be washed out, like it never happened.”
The “big question,” Miller said, is whether there should continue to be a cap on government debt. For his part, he advocated its abolition. He noted that since the Carter administration, the United States has approached its debt ceiling 49 times and Congress voted to raise it 49 times. In fact, he said, that has been the case every time the ceiling has been approached since it was established in 1914.
“In the aftermath” of a hike in the debt ceiling, he said, “the momentum of federal spending does not change. All it does is provide a headline for the political side of the economy. And who owns the federal debt anyway? Seventy percent of it belongs to U.S. individuals, investors, corporations and federal agencies.”
Except for Europe, the worldwide economy is strong, particularly in the United States, Miller said. “For those of you who are still inundated by your international partners telling you the country is on the verge of falling to second-class status, the truth is that the United States is as dominant across the globe as it has ever been, and there aren’t any strong signs that we’ll head in the other direction. One of every three dollars in global wealth is here. Our economy is greater than the combination of our five nearest competitors.”