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Schwarzman expects 2% growth as 'flywheel' keeps the US economy running

Julia La Roche

Billionaire private equity chief Stephen A. Schwarzman sees the U.S. economy continuing its decade-plus growth spurt, because there's "a flywheel going on now that works."

On Friday, the Labor Department reported that the U.S. economy created 225,000 jobs in January — far above Wall Street’s consensus and underscoring that 2019’s momentum carried over into the new year.

Even amid some nervousness about global growth, the CEO of $571 billion Blackstone (BX) expects the world’s largest economy to continue its expansion.

"I think we see the economy growing. It feels like a 2% type growth," Schwarzman told Yahoo Finance this week, pointing to low interest rates and a lack of imbalances in the economy.

As the world's largest private equity firm, Blackstone is among the top employers. From his vantage point, Schwarzman sees wages supporting economic growth — a phenomenon illustrated by January’s jobs data.

"We can see, for example, in hotels, that the lower-income workers are getting roughly 4% type increases. And that's in a 1% inflation,” Schwarzman explained.

“So what's happening is that the people at the bottom, the workers at the bottom of the pyramid, are, you know, experiencing increasing wages,” he added.

“And that money then gets spent by them, seldom is saved, and that powers the U.S. economy. And that's a good thing for those individuals. It's a good thing for the overall economy,” the billionaire said.

Election to have ‘real impact’

NEW YORK, NEW YORK - OCTOBER 10: Moderator Julia La Roche ad CEO of the Blackstone Group Stephen Schwarzman attend the Yahoo Finance All Markets Summit at Union West Events on October 10, 2019 in New York City. (Photo by Jim Spellman/Getty Images)

Schwarzman, a Republican and confidante of President Donald Trump, recognizes that the 2020 election may pose a significant impact on growth— pointing to the different "philosophies" espoused by the Democratic hopefuls.

"Priorities are changed or not, and money [is] allocated different ways,” Schwarzman told Yahoo Finance. “Growth does better or worse, you know, under different approaches. So, I think 2020 is a big deal for sure."

At this time, Schwarzman isn't sure who the Democratic candidate will be.

"You know it will be President Trump on the Republican side. And I'm sure there'll be some debate about basic principles of where are we going, or how do we get there? And that's normal,” he stated.

“And, you know, the path that the country takes will have a real impact,” Schwarzman added.

Julia La Roche is a Correspondent at Yahoo FinanceFollow her on Twitter.

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