Brian Jacobsen, Chief Economist, Annex Wealth, joined TheStreet to explain why slowing growth won’t necessarily lead to a recession this year.
Transcript:
CAROLINE WOODS: How would you describe the state of the overall economy right now?
BRIAN JACOBSEN: I would say that the economy right now is treading water. So things aren’t quite as great as what they were last year. And we went effectively through the first quarter with massive uncertainty. And that uncertainty led to hesitancy on the part of businesses and consumers. And we really do need some of that clarity in order to see a re-acceleration of economic activity. So if you use an analogy that the Fed has used in the past about flying a plane, they want to stick the landing. We might be in this little pocket of turbulence right now as they try to navigate the market or the economy overall to that soft landing. So you could go through that period of time where you encounter a little bit of turbulence. So you want to make sure that you have your seat belt fastened.
CAROLINE WOODS: Turbulence, but is a soft landing your base case? Or do you think that we still have to worry about the prospects of a recession?
BRIAN JACOBSEN: I do not think that we’re going to see a recession necessarily. And most of that is because I’m fairly confident that we will get a little bit more of that clarity on policy, that, then we could see some acceleration in economic activity as we go into the latter part of the third quarter and into the fourth quarter. So that decline in GDP that we saw in the first quarter, I don’t think we’re on pace to get two consecutive quarters in a row of a decline in GDP. More importantly, I think that we’re not going to see a broad based and persistent decline in economic activity that’s really pervasive across a lot of the sectors of the economy. So with a little bit of clarity can go a long way to avoid a recession.
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