Pimco’s Outlook on the U.S. Economy: A Discussion with Alec Kersman
CNBC’s Martin Soong recently sat down with Alec Kersman, the managing director and head of Asia-Pacific at Pimco, to discuss the firm’s latest economic outlook and the potential for a U.S. recession in 2025. Kersman shared his insights on the current economic landscape and how Pimco’s estimates have evolved.
The Economic Backdrop
According to Kersman, the global economy is currently experiencing a synchronized expansion, with the U.S. leading the way. The labor market is strong, and consumer spending is robust. However, there are also signs of inflationary pressures, which could lead to higher interest rates.
The U.S. Recession Estimate
When asked about Pimco’s previous estimate of a U.S. recession in 2025, Kersman acknowledged that the firm has revised its view. He explained that the strong labor market and consumer spending have led them to push back their recession call to 2026. However, he cautioned that this outlook is dependent on the Federal Reserve’s ability to manage inflationary pressures and avoid an overheating economy.
Impact on Individuals
For individuals, a delay in the next recession could mean continued economic growth and job security. However, it could also lead to higher interest rates, which would increase the cost of borrowing for mortgages, car loans, and credit cards. Additionally, a prolonged expansion could lead to asset price bubbles, which could burst and result in significant losses for investors.
Impact on the World
On a global scale, a delay in the next U.S. recession could have several implications. Developing economies, which are heavily reliant on exports to the U.S., could benefit from continued demand for their goods and services. However, a stronger U.S. dollar could make their exports more expensive, offsetting any gains. Additionally, a prolonged expansion in the U.S. could lead to a continued flow of capital into emerging markets, potentially fueling asset price bubbles and increasing financial instability.
Conclusion
In conclusion, the U.S. economy is currently experiencing a robust expansion, with strong labor market and consumer spending. However, there are signs of inflationary pressures, which could lead to higher interest rates and an eventual recession. According to Pimco, the next recession is now expected in 2026, but the outlook is dependent on the Federal Reserve’s ability to manage inflationary pressures. Individuals could see continued economic growth and job security, but also higher borrowing costs and potential asset price bubbles. On a global scale, a delay in the next U.S. recession could have significant implications for developing economies and financial markets.
- The U.S. economy is currently experiencing a robust expansion, with strong labor market and consumer spending.
- There are signs of inflationary pressures, which could lead to higher interest rates and an eventual recession.
- Pimco now expects the next U.S. recession in 2026, but the outlook is dependent on the Federal Reserve’s actions.
- Individuals could see continued economic growth and job security, but also higher borrowing costs and potential asset price bubbles.
- A delay in the next U.S. recession could have significant implications for developing economies and financial markets.
