The economy may be slowing down, as shown by the Atlanta Federal Reserve's forecasting model, which puts third-quarter growth at 1.5 percent.
But investors and corporate chiefs assembled for summer lunches by Byron Wien, vice chairman of Blackstone Advisory Partners, don't see an economic downturn in the offing.
"Bear markets usually precede recessions, and almost everyone believed there was no recession in sight," he writes in Barron's
. "One pointed out that no recession had ever occurred without at least one instance of Federal Reserve tightening."
Many economists expect the Fed to begin increasing interest rates at its meeting next week or in December. The Fed has kept short-term rates at a record low near zero since December 2008.
"Perhaps the widespread discussion of when the Fed would raise rates is a substitute for the reality of the actual move," Wien says. "But most observed that the United States was basically a consumer economy, exports represent only 13 percent of GDP, the unemployment rate had come down and those with jobs were still spending."
Elsewhere on the economic front, some notable experts argue that technological innovations in the future won't raise our living standards as much as they have in the past, dooming the economy to slow growth.
But Harvard economist Martin Feldstein begs to differ.
While GDP growth per worker has shrunk markedly since 1972, "the official statistics on GDP growth fail to capture most of the gains in our standard of living that come from new and improved goods and services," he writes on Project Syndicate
. So the depressed numbers don't account for air conditioning, new surgical procedures etc.
The economy has grown only 2.1 percent a year since the Great Recession ended in June 2009, compared to a rate of 3 percent from 1960 to now. But that doesn't mean we're doomed to poverty, Feldstein says.
"There is simply no reason for the view ... that the children of today will not enjoy a standard of living as high as their parents’." To guarantee a bright future, we need to improve education, boost savings and investment and reform taxes and entitlements, Feldstein says.
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