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U.S. Economy Is ‘Fine,’ Rollover Concerns Overdone, Says GSAM’s Swell

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U.S. Economy

Mike Swell, co-head of global fixed income portfolio management at Goldman Sachs Asset management, discusses the state of the U.S. economy.

What is Eric Swell’s overall prognosis for the US economy and how does he advise investors to approach the market?

The United States economy has faced significant challenges in recent years, ranging from political polarization to a global pandemic. Nevertheless, the economic outlook has been clarified, and concerns have been overblown, according to GSAM’s Eric Swell.

In an interview with Reuters, Swell, co-head of global fixed income for Goldman Sachs Asset Management (GSAM), emphasized that the U.S. economy is in good shape and that concerns about a rollover are overdone.

“I don’t think there is any fundamental reason to be concerned,” Swell stated at the Reuters Global Investment Outlook 2022 Summit. “We are in a fine economy. We are not in a bubble.”

One of the factors that Swell identified as a positive indicator of the U.S. economy is the labor market. Despite COVID-19’s initial impact, Swell stated that job openings have risen decisively in recent years. Moreover, he predicted that this trend would persist because of increased migration and vaccination rates.

Swell also discussed the impact of rising interest rates and inflation on the U.S. economy. In his opinion, the rising rates reflect the normalization of monetary policy as the economy recovers from the pandemic. He added that the U.S. Federal Reserve’s decision to raise interest rates would be gradual and that U.S. Treasury bonds is still an excellent investment due to the country’s robust economic foundation.

According to Swell, the market’s fixation on inflation also appears misplaced. While it is appropriate to be cautious about the impact of inflation, Swell stressed that the current inflation rates are unlikely to grow beyond 2% or 3%.

“Even in this inflationary environment at present, we don’t see it as a significant headwind,” he remarked.

Despite his encouraging prognosis for the U.S. economy, Swell admitted that there were some headwinds to watch. COVID-19, geopolitical risk, and monetary policy normalization could all pose challenges to the economy in the coming year.

In conclusion, Swell emphasized that the U.S. economy was sound and that investors should remain confident in the market’s resilience.

“The economy is fine,” Swell declared. “It’s worth keeping an eye on the risks, but there is no need to be overly concerned.”