天美传媒

While the world is expected to enjoy another year of robust economic health during 2018, the U.S. may begin to show signs of weakness during 2019, despite landmark new tax reforms.

That was the prediction of members of 天美传媒鈥檚 who spoke to MBA students on the Barcelona campus, where they are attending their annual meeting. The council is composed of business and public-sector leaders based in the U.S., and advises and supports the school in its activities there.

The consensus was that 2018 will be a generally positive year for the global economy. But things may get trickier in 2019 鈥� especially in the U.S.

鈥淕lobal growth is strong and robust鈥� at the moment, said Fritz Folts of 3Edge Asset Management. 鈥淏ut I would think it鈥檚 possible that at some time during 2019 the U.S. economy will turn.鈥�

Fiscal Plan鈥檚 Mixed Impact on Companies

That despite December鈥檚 historic tax legislation, aimed at energizing the U.S. economy. The speakers said that while the fiscal overhaul may be prompting many large U.S. corporations to repatriate funds, questions remain on how that money will be spent.

One of the biggest questions is whether companies will use the funds for stock buy-backs 鈥� a move which is tempting and generally rewarded by the markets 鈥� or whether they will make the sort of long-term capital expenditures that don鈥檛 produce immediate returns.

Jay Ireland, president and CEO of GE Africa, noted that having greater flexibility to move capital is a plus, but is unlikely to fundamentally alter the company鈥檚 long-term investment strategies. GE鈥檚 investments in the U.S. tend to focus on next-generation technologies, while its spending on factories and manufacturing tends to be in the developing world. That won鈥檛 change, he said.

What would change the company鈥檚 outlook is if protectionist rhetoric in the U.S. and other countries escalates into trade barriers or trade wars. 鈥淲e鈥檙e truly a global company and if we had to depend only on the U.S. market, we wouldn鈥檛 have the growth,鈥� Ireland said.

Focus on Interest Rates, Regulations

Beyond the fiscal situation, the business leaders are looking at factors such as interest rates, inflation and financial sector regulations. The extended economic expansion of recent years may be nearing the end of its cycle, they say.

Claire Huang, an independent board director and former chief marketing officer at JPMorgan Chase, welcomes a rollback in regulations governing the financial sector. 鈥淭he great thing that鈥檚 happening right now is that some of the regulations that were put into place in the Great Recession are being pulled back,鈥� she said. 鈥淣ow that they鈥檙e easing up on the regulatory environment, it鈥檚 a huge difference.鈥�

But many economists forecast an end to the era of quantitative easing of interest rates. That will have a particular impact on debt-burdened individuals and companies in the U.S., contributing to a potential slowdown in growth.

And even before that, capital markets are likely in for greater volatility this year, after posting month-on-month gains every month of 2017. 鈥淚n terms of the capital markets there鈥檚 going to be volatility going forward as some of that liquidity gets extracted,鈥� said Folts.