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Economists at SIFMA’s Annual Meeting Preach “Cautious Optimism” About US Growth

By Kyle Brandon and Peter Matheson

Economic news from abroad has made headlines on a regular basis during the past few years. From concerns about Greek solvency, the summer’s slowdown in China and weakness in emerging markets to the discussion of trade deals as the Trans-Pacific Partnership, the interconnectedness of the global economy is apparent.

At SIFMA’s 2015 Annual Meeting, The Capital Markets Conference, participants discussed both the short- and long-term implications of an increasingly globalized world for investors and public officials alike.

A panel bringing together chief economists from several prominent institutions focused heavily on the immediate question of the U.S. economy’s resilience. “We’re living in a bounded and divergent world,” said JPMorgan Chase Chief Economist Bruce Kasman, noting that continued improvement in the U.S. and Western Europe was largely offsetting struggles in emerging markets. “There are risks here, but I think what we’re seeing so far is that we’re not breaking out of that bounded environment.”


The overarching mood of the panel was one of cautious optimism about near-term growth. “We have defined down optimism,” said Stuart Hoffman, Senior Vice President and Chief Economist for PNC Financial Services Group. “The reason I’m not more pessimistic is the strength of the American consumer.”

The relative strength of U.S. markets against international headwinds does not diminish the broader significance of a globalized economy. “Interconnectivity of the world now is so much greater than it was decades ago,” said Vanguard Chair and CEO William McNabb. “We’re seeing a much different world with more interconnectedness, much more correlation between markets.”

Several political leaders at the conference echoed this idea, pointing out the opportunities that come along with free movement of people and capital across borders. Governors Terry McAuliffe of Virginia and Asa Hutchinson of Arkansas joked about running into one another at events overseas, where they often pitch the benefits of investing in their home states. Hutchinson pointed out that this type of healthy competition between states is a good thing for their respective business climates.

“It’s a big globe out there,” added McAuliffe.

Of course, the benefits that flow from globalization are not necessarily inevitable. The prevailing theme among policymakers and regulators in attendance was the need for strong U.S. leadership and greater international cooperation. David Wright, Secretary General of the International Organization of Securities Commissions, called out shared data as an area particularly ripe for more progress.

“With better data and better understanding, our knowledge of risk will improve quickly,” said Wright. He added that the U.S. has the potential to help push this process forward for the betterment of everyone on the planet.

U.S. Secretary of the Treasury Jacob Lew shared Wright’s support for American leadership, questioning those who criticize U.S. involvement on the world stage. “It would be an unwise retreat from the post-World War II Bretton Woods framework, where we have been a world leader in economic issues for more than 70 years,” said Lew.

Kyle Brandon
Managing Director and Director of Research
SIFMA

Peter Matheson
Managing Director of International Policy and Advocacy
SIFMA

 

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