Investment guru Ed Yardeni predicts millennials and baby boomers will help the U.S. achieve its greatest economic expansion in history.
"They [baby boomers] are increasingly becoming minimalists. They are trading down in terms of houses that they want to live in," the Yardeni Research founder recently told CNBC.
"At the same time, we've got millennials who are also minimalists," the Newsmax Finance Inisder added. "Many prefer to rent and stay in the city, and not buy houses, and not even buy cars," the Wall Street veteran said.
Yardeni explained that the weaker spending should actually be considered a bullish factor, because it helps prevent the U.S. economy from overheating.
"Put it all together and you've got an economy that continues to grow led by consumer spending, but not in a fashion that suggests that a boom is going to lead to inflation, and a Fed reaction that leads to a bust," he said. "So, all in all, I put it together as still a very favorable environment for stocks."
Yardeni also hasn’t been swayed by contagion fears sparked by Turkey’s economic crisis and global trade disputes.
"This all creates a lot of commotion on a global basis. It kind of makes the U.S. look like an island of serenity, all things considered. I think this really favors investing in the U.S. as opposed to investing on a global basis," he said.
"The earnings picture really has been phenomenally strong. I've been bullish on earnings, and it's coming in even stronger than I expected," he noted.
"What the stock market cares about most is the business cycle," Yardeni said. "As long as investors perceive that the U.S. economy can continue to grow without a risk of recession, you get a bull market.
However, not everyone is as optimistic about the currency economic landscape.
Billionaire Charles Koch recently said he worries President Donald Trump’s actions on trade and tariffs put the booming U.S. economy at risk of recession, Bloomberg reported.
“It depends on the degree” of the trade conflict that the U.S. pursues with countries such as China and Canada, Koch said in Colorado during a rare on-the-record meeting with reporters. “If it’s severe enough it could” end in recession.
“Any protectionism at any level, and certainly at the national level, is very detrimental,” Koch said. “Every nation that’s prospered is one that didn’t engage in trade wars.”
It would be “disastrous,” Koch said, if the U.S. were to “completely close” itself off from trading with other nations. The Trump administration hasn’t proposed that step. But Trump said this month, for example, that he was ready to put tariffs on all goods imported from China. “I’m ready to go to 500,” Trump said on CNBC on July 19, referring to $500 billion.
(Newsmax wire services contributed to this report).
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