‘The best returns are just around the corner’: First Trust economist

By Melissa Shin | June 20, 2023 | Last updated on October 27, 2023
2 min read

The best-telegraphed recession in history has yet to arrive, but it’s probably on its way.

“In the short term, we do believe a [U.S.] recession is coming,” said Strider Elass, senior economist with Illinois-based First Trust Advisors L.P.

Elass, who suggested the U.S. could slip into recession by the end of 2023, was speaking at an event in Toronto last week held by First Trust Canada.

“But when I look out over the next five to 10 years, I think some of the best returns that we have seen in a long time are just around the corner,” he said, citing the emergence of growth-driving technologies such as artificial intelligence, 3D printing and nanotechnology.

“In the short term, be cautious, but in the long term, you want to make sure you’re invested,” he said.

Some market observers have questioned whether the U.S. economy is experiencing a rolling recession, in which some sectors contract and others expand. Elass said this is plausible: the U.S. housing sector fell into recession about a year ago, the goods sector has slowed dramatically, but services are still holding up.

He said he doesn’t think a rolling recession is likely. On the other hand, there’s a small chance the U.S. could escape a recession altogether.

“Time will tell, but if we don’t see a recession in the next six to nine months, then [chances] are good we probably won’t see a recession [at all],” Elass said. “But there are enough areas that are softening right now [that] at some point [the economy is] going to catch up, and we think that’s going to be in the next six to nine months.”

Elass added that he’s not currently concerned with the indebtedness of U.S. households, but if a recession hits, debt will become a bigger factor for consumers.

He said the U.S. household financial obligations ratio is currently lower than average, thanks in part to about 96% of mortgages being fixed — with most being fixed at a rate of 4% or less.

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Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.