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Gary Schlossberg, image via newsok.com

published on January 8, 2018 - 2:42 PM
Written by Gabriel Dillard

A nationally recognized economist was in Fresno Monday warning community leaders that one of the longest economic expansions in history is heading into uncharted territories.

Gary Schlossberg, vice president and senior economist with Wells Capital Management, told the Fresno Rotary Club the current expansion is the “Old Man River economic cycle — it just keeps rolling along.” Starting in June 2009, the current upturn is nearing its nine-year mark, and is the 3rd longest economic expansion since the 1850s.

If it lives on until April, it will move into 2nd place, he added.

With Wall Street returns around 22 percent, and respectable bond market returns around 3 percent, Schlossberg said it’s been a good time to be an investor. Low interest rates and inflation, a relaxed regulatory environment, a tailwind from national tax reform and a strong global economy have each had a positive effect.

Even in Fresno, Schlossberg noted, growth has been at or above the statewide average, with both residential and commercial construction a strong factor.

But there are concerns that other parts of the tax reform could rain on the parade. For instance, economists are concerned that the doubling of the standard deduction could hamper home buying by making mortgage interest deductions less attractive. The partisan nature of the tax bill — no Democrats voted for it — could also portend a change in direction should Democrats gain more Congressional seats during the midterms later this year.

Combined with the poor state of infrastructure, the aging population, slower population growth rates and flagging productivity, “it will be a challenging environment for the economy,” Schlossberg said.

Schlossberg also commented on the current craze around cryptocurrencies such as Bitcoin, which is currently trading at nearly $15,000. He said the volatility of such currencies make them harder to use as a transaction source.

“It seems to me crypto is becoming a victim of its own success,” Schlossberg said.

He also discussed the concern that cryptocurrencies could someday eclipse the dominance of the dollar in the economy, limiting government control. That’s why, he added, the Federal Reserve is exploring the creation of its own digital currency.

“Currency that circumvents official channels is very dangerous,” he said.


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