Setting the stage for OWS2.0…
Economist Dr. Marci Rossell, former CNBC chief economist and co-host of Squawk box, provided a riveting presentation on Global Outlook 2020: The Quest for Growth Amid the Turmoil.
First, she had the audience look back at the economic shifts over the last decade that led to major bankruptcies in the energy, retail and other sectors and tell a story about how the world is changing. These include significant changes in retail delivery, energy production, financial markets and public policy.
Despite factors that are now creating uncertainty such as Brexit, trade wars and the coronavirus outbreak, her outlook was cautiously optimistic and Rossell said she does not foresee a global recession on the horizon.
“A large negative shock to an economy is needed to cause a recession,” she said, noting past recessions were caused by the boom and bust of technology stocks in 2001 and the housing market in 2008.
“2019 was the year of the recession that wasn’t,” Rossell told the delegates.
“These are not typical ‘stimulus’ packages, the efficacy of which can be hotly debated in normal economic downturns,” she said. “These are measures designed to stem panic and provide a temporary lifeline to solvent businesses. The virus is now in control of the timing of recovery, but governments can make a difference in terms of how painful the waiting will be for everyone.”
When Rossell spoke in mid-February before the coronavirus had rapidly spread, she said the real issue would be “psychological disruption” to travel, leisure and entertainment industries in the short term but she did not believe it would not be strong enough to create a global recession.
In updated comments to PULSE in March, Rossell said governments worldwide learned many lessons from their halting response to the crisis of 2008 and are quickly bringing the full weight of fiscal and monetary policy to bear on the problem.
According to Rossell’s presentation at OWS 2.0, the trends we should take note of over the next decade are:
- Historic economic indicators – such as oil and stock prices and the inverted yield curve – used to predict the strength of the market no longer work. Income per person is a stronger measure to look for.
- Population stabilization and declines around the world in the U.S., Asia and Europe will make it harder to find good talent because there simply won’t be enough people to do the work. This is a problem because the only two ways to grow an economy, she said, are to either add more workers or make the workers more productive.
- The uncertainty in the short-term is just as high as it is longer-term requiring companies to plan for more contingencies than ever before.