flexiblefullpage -
billboard - default
interstitial1 - interstitial
Currently Reading

Morgan Stanley bucks gloom and doom, thinks U.S. economy has legs through 2020

Market Data

Morgan Stanley bucks gloom and doom, thinks U.S. economy has legs through 2020

Strong job growth and dwindling consumer debt give rise to hope.

By John Caulfield, Senior Editor | January 13, 2016

Economists continue to debate whether the U.S. economy will be more resilient than other nations and thrive, or limp along for the next several years. Image courtesy Pixabay

Last week, The World Bank lowered its estimate for global growth in 2016 to 2.9%, from its 3.5% prediction last June. The Bank is particularly concerned about slowdowns in China and developing companies that could reverberate, long term, to advanced economies.

However, the Bank’s forecast was more optimistic about the United States, whose 2.7% economic growth in 2016, if realized, would be its fastest pace since 2006.

Whether the U.S. can outpace other nations’ economies is a topic of some debate. James Pethokoukis, a Fellow at the American Enterprise Institute, thinks the U.S. could face decades of “unhealthy economic populism” if GDP and job growth aren’t matched by productivity gains, which over the past five years have averaged only 0.6%.  More dour is Citigroup, which is on record that there’s a 65% chance of another recession in the U.S. this year.

The current state of America’s stock market, which got off to a miserable start in 2016, doesn’t exactly augur happy days ahead. But that downturn, and the generally mediocre pace at which the world’s economies are moving, didn’t deter Morgan Stanley from reiterating its belief that the U.S. would continue growing through 2020, and thereby achieve the longest economic expansion in the post-World War II era.

Morgan also thinks that if the U.S. skirts another recession, corporate profit growth could lift the S&P 500 to 3,000 by 2020. (That Index ended Jan. 13 at 1,890.28, down 48.40 to its lowest level since last September. Morgan’s prediction is in sharp contrast with economic bears who are already predicting the S&P 500 could collapse by as much as 75% from its peak of 2100 last year, driven down by China’s currency deflation.)

There are three main reasons why Morgan Stanley remains bullish about the American economy:

•The U.S added about 200,000 jobs per month in 2015, its second-best year for employment gains since 1999. The employment picture spurred consumer confidence, as measured by the University of Michigan, to average 92.9 last year, the highest it’s been at since 2004.

•Americans are getting themselves out of the red. Morgan Stanley notes that debt to disposable income, at about 106%, has fallen from 138% in 2008. And the portion of loan balances that are 90-plus days delinquent fell below 4% for the first time since the recession ended.

•Big companies are cleaning up their balance sheets and being a lot more careful about what they invest in. Morgan Stanley expects capital spending-to sales at the largest 1,500 corporations to fall to 4.6%, compared to between 6% and 9% before the last two recessions. S&P 500 companies have about $100 billion in loans coming due this year and $300 billion in 2017, which Morgan considers manageable amounts.  

Related Stories

Market Data | Jul 1, 2022

Nonresidential construction spending slightly dips in May, says ABC

National nonresidential construction spending was down by 0.6% in May, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.

Market Data | Jun 30, 2022

Yardi Matrix releases new national rent growth forecast

Rents in most American cities continue to rise slightly each month, but are not duplicating the rapid escalation rates exhibited in 2021.

Market Data | Jun 22, 2022

Architecture Billings Index slows but remains strong

Architecture firms reported increasing demand for design services in May, according to a new report today from The American Institute of Architects (AIA).

Building Team | Jun 17, 2022

Data analytics in design and construction: from confusion to clarity and the data-driven future

Data helps virtual design and construction (VDC) teams predict project risks and navigate change, which is especially vital in today’s fluctuating construction environment.

Market Data | Jun 15, 2022

ABC’s construction backlog rises in May; contractor confidence falters

Associated Builders and Contractors reports today that its Construction Backlog Indicator increased to nine months in May from 8.8 months in April, according to an ABC member survey conducted May 17 to June 3. The reading is up one month from May 2021.

Market Data | May 18, 2022

Architecture Billings Index moderates slightly, remains strong

For the fifteenth consecutive month architecture firms reported increasing demand for design services in April, according to a new report today from The American Institute of Architects (AIA).

Market Data | May 12, 2022

Monthly construction input prices increase in April

Construction input prices increased 0.8% in April compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.

Market Data | May 10, 2022

Hybrid work could result in 20% less demand for office space

Global office demand could drop by between 10% and 20% as companies continue to develop policies around hybrid work arrangements, a Barclays analyst recently stated on CNBC.

Market Data | May 6, 2022

Nonresidential construction spending down 1% in March

National nonresidential construction spending was down 0.8% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.

Market Data | Apr 29, 2022

Global forces push construction prices higher

Consigli’s latest forecast predicts high single-digit increases for this year.

boombox1 - default
boombox2 -
native1 -

More In Category

halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021


Magazine Subscription

Get our Newsletters

Each day, our editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.


Follow BD+C: