RBC Global Asset Management’s chief economist shares his views on the cycle positioning of the U.S. economy and recession probabilities.

Given the august age of the U.S. expansion, it’s fair to think about the expansion’s life expectancy and the appropriate investment strategy. Recently we checked in with Eric Lascelles, chief economist at RBC Global Asset Management, about the economic growth outlook, the cycle positioning of the U.S. economy, and recession probabilities.

U.S. economic growth has exceeded that of other developed countries. Will that persist?

U.S. fiscal stimulus is fading, ceasing to provide a material boost to economic growth in 2019, and eventually translating into an outright drag in 2020. This marks quite a contrast to last year, when stimulus provided a heroic boost to U.S. growth.

Global economic headwinds include protectionism, fading fiscal stimulus, and somewhat less favourable financial conditions (recent inversion of yield curves). These headwinds blow more strongly in the U.S., suggesting that the country’s growth advantage could begin to shrink relative to the rest of the developed world. The economy of the other global behemoth—China—also continues to slow, though stimulus programs may start to gain traction by the second half of the year.

Given the time of year, it is perhaps also worth mentioning that U.S. growth often suffers from a curious seasonal distortion that makes the first quarter of each year appear unnaturally weak. Any U.S. softness in the near term needs to be filtered through this lens.

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