Both the U.S. markets and the economy started the first quarter off strong: there were a few blips in the data but the recovery looked robust and markets reached levels not seen before the crisis. But a string of weaker-than-expected economic reports in just a few short weeks have caused a growing number of investors and economists to question whether the economic rebound has stalled.
Martin Wolf, chief economics commentator at The Financial Times, says the economy continues to face massive headwinds.
"My view throughout has been that we were going to have a very weak, very uncertain, very inconsistent recovery in all the developed countries," he says in an interview with The Daily Ticker. "The U.S. can continue to grow, but it's going to be disappointing growth. I've always thought [the recovery] would be a 7-10 year process from the start."
Wolf supports bigger fiscal deficits and more expansionary monetary policy to speed up and bolster anemic economies. But governments around the globe are choosing austerity over additional stimulus and he acknowledges that monetary policy, at least in the U.S., is at its limits. China's domestic expansion has greatly outpaced Western nations over the last few years, but even China cannot sustain its rapid growth much longer, Wolf says.
"The real engines of the world economy really aren't really very strong," he notes.
The U.S. may be lucky enough to slip past recession but Wolf expects the Eurozone will contract this year if it's not already in a recession. While there are bright spots for the U.S. economy — net exports and consumer consumption — they're not enough to pull the U.S. out of its dismal economic situation, Wolf says.
"If you look at the underlying dynamics of the economy -- consumption, investment, exports, government spending -- they are going to be weak and uncertain," Wolf adds. "I expect the U.S. to have a pretty miserable few years, and I think that will be true for whoever wins" in November.
