Tags: Tom Hutchinson | recession | economy | High Income Factor

High Income Factor's Tom Hutchinson: Next Recession Will Put Us in 'Deeper Hole'

By    |   Friday, 30 January 2015 08:44 PM

The U.S. economy is in great shape now, but the next recession won't be pretty, Tom Hutchinson, the senior editor of the Newsmax newsletter “The High Income Factor” and member of the Newsmax Financial Braintrust (FBT), told Newsmax TV.

"When we head to the next recession, because of the fundamental problems like low wages and poor job growth, we're going to be in a deeper hole than we are in most of them," he said on the network's "America's Forum" show.

As for now, "the U.S. economy is in better shape than anywhere else, and the chief reason is that the U.S. economy is singularly magnificent," Hutchinson said.

"We're good at this business stuff, and the U.S. economy is resilient."

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To be sure, "this is still a lame recovery because there really haven't been needed fundamental reforms, like tax reform and deregulation among other things," he said.

"The economy still has one hand tied behind its back because of that. But even with that, it's the envy of the world right now, and this is the highest growth we've had in the recovery so far."

GDP expanded 2.4 percent last year, the fastest pace since 2010.

Hutchinson isn't impressed by the Federal Reserve's easing program. "You've had an artificially inflated economy by the Fed. All that extra money has propped up the market and asset prices in a way that benefits the wealthy more than the wage earner," he said.

The Fed is expected to begin raising interest rates around mid-year. But "I don't think it'll mean too much to the average American," Hutchinson said. That's because the Fed will be lifting rates from such a low level. The Fed has kept its federal funds target rate at a record low of zero to 0.25 percent since December 2008.

"Now here we are six years later, when the economy has been recovering, and we're still at that level," Hutchinson said.

"So to move up just a little bit higher than Armageddon isn't going to change the dynamic. Rates are still going to be very low on traditional fixed income investments, they're still going to be very low on loan rates."

As for the equity market, "you have utility stocks and real estate investment trusts skyrocketing and everything in the energy and commodity class getting slaughtered," Hutchinson said.

"That means some of the stocks in the energy and commodity space have gotten dirt cheap. What I like particularly here are the infrastructure stocks, like Kinder Morgan, which pipe and store oil and gas and really aren't that affected by lower commodity prices."

These companies will still make money, because "there's going to be a whole lot of oil and gas sloshing around the country in the next few years," Hutchinson said.

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The U.S. economy is in great shape now, but the next recession won't be pretty, Tom Hutchinson, the senior editor of the Newsmax newsletter "The High Income Factor" told Newsmax TV.
Tom Hutchinson, recession, economy, High Income Factor
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2015-44-30
Friday, 30 January 2015 08:44 PM
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