U.S. Economy on a Roll | American Funds

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Market Commentary

June 2015

U.S. Economy on a Roll

An economist shares his positive outlook for the U.S. economy, given the low debt burden, upswing in housing activity and business investment, and other factors.



Darrell R. Spence


Darrell Spence: Debt burdens are very, very low. Debt levels relative to income have come down. Rates have come down a lot, so debt is very affordable. That’s going to translate into an ongoing improvement in housing activity. On the business investment side, profit growth remains pretty healthy. Utilization rates are moving up as the economy continues to move along at a pretty healthy pace. So business investment is likely to pick up or at least remain pretty solid as we go through 2015. 

Fiscal austerity is done. There is absolutely no appetite for it anymore, nor will the budget numbers at the state or the federal level encourage anybody to undertake any more fiscal austerity. What’s going to stop this? Everything is rolling right along, and the most likely culprit I can think of, if it’s not events outside of the U.S. — and I do worry that maybe I’m underestimating the impact of that — but if it’s not that, it’s Fed policy. And my bias is the Fed is going to be very, very, very slow about raising rates. I think they still do it beginning this year, at some point this year, but I also think that their bias is to do it as slowly as possible.  

So you have an economy that’s rolling along, generating lots of momentum. What’s to stop it? I don’t see anything. I really don’t. So I think we’re easily going to hit 3.5% growth this year, and it could be in excess of 4%. I think if we had not lived through all the stuff that we’ve lived through over the past couple of years, and if all of the chatter about what’s going on in the rest of the world wasn’t so loud, we would be up here having a party. We’re so reluctant to get optimistic about things, but at any other time we would look at these numbers and we would think, “Wow, this is a really, really healthy economy.”

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Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.