Aside from an ongoing political impasse in the U.S. and economic uncertainty over its trade relationships, the U.S. economy is not doing that badly, according to EY’s global chairman and CEO.
“We’ve gone from an excess of confidence (in the business world) to an excess of pessimism in my view because we are still seeing a very strong U.S. economy right now,” Mark Weinberger, EY Global Chairman and CEO told CNBC on Tuesday.
“People are following the news feeds as to what’s going on in the core underlying economics right now. We’re still seeing five quarters of double-digit growth in a row for profits and we’re still talking about a 2.5 percent-plus increase in GDP in the U.S. which, over the last 10 years, is one of the strongest,” he said, speaking to CNBC at the World Economic Forum in Davos.
“So, I think what we’re doing is talking ourselves into uncertainty which is clearly out there from the geopolitical perspective, but from the economic perspective we’re still seeing very strong fundamentals.”
Despite Weinberger’s optimism, there are widespread concerns among business leaders and investors over the global growth outlook. On Monday, the International Monetary Fund (IMF) downgraded its forecast for global growth in 2019, to 3.5 percent, citing ongoing trade tariffs between the U.S. and China and weakness in financial markets, among other reasons, for the lower forecasts.
Tumultuous domestic politics in the U.S., U.K. and within Europe are also dominating concerns. In particular, an ongoing partial government shutdown in the U.S., as President Trump and Democrats in Congress continue to argue over funding for a border wall, had damaged public confidence, Weinberger noted.
“The economic effects of (the U.S.) shutdown haven’t been terribly dramatic so far. But if it continues for weeks on end it will be, it’ll slow down … But I think the bigger issue is the lack of confidence that it will bring to the people in the U.S.,” he said.
Weinberger, who has acted as one of several business advisers to Trump in the past, said he would counsel him now to “get back to work with the Democrats and try and keep the economy in the good position that it’s been in.” Pro-growth policies had to be maintained, he added.
“The U.S. has been leading the world in growth and we need to have that, especially with China growing and so the government being closed won’t help that … We’ve really got to make sure that the policies continue to be pro-growth.”
He said a lack of faith in government was being seen in Europe too, with the public in the U.K., France and Italy all experiencing a crisis of confidence in their governments to various degrees.
