The United States (US) economy will have to look to business and residential investment and not household consumption as the driver of future growth, according to the Blackrock Investment Management managing director and co-head of fixed income, Peter Fisher.
Speaking at a Blackrock Investment lunch on US economic prospects, Fisher said the economy is still suffering from the shock of the consumption collapse, and the continuing instability of the economy, including rising unemployment, would keep income growth down, causing a lack of consumption.
However, there would need to be “pretty powerful” business and residential investment to power the economy above current growth trends, and while that could still happen, it wasn’t likely to occur, Fisher said.
The economy was also likely to return to the more volatile 1970-1980s model, shrinking and expanding every couple of years. There wouldn’t be a recession every year, but they would go back to something “a lot choppier”, he said.
