Billionaire investor Wilbur Ross is urging the Federal Reserve to raise rates now so the central bank has some ammunition to fight back when a recession grips America within 18 months.
“We at some point, probably within the next 18 months, are likely to go into a recession, especially — frankly — if you have Hillary Clinton elected and she increases taxes. But with or without that, we have a great risk of going into a recession,” Ross told Bloomberg Television.
“The Fed’s toolbox is basically empty. They need to replenish
that toolbox in order to have a way to help, if and when we get
into this recession that I see in the next 18 or so months,” he
said.
“I believe that the dithering over it has created so much market
uncertainty — both about interest rates and more importantly
about the direction of the economy — that that dithering has
done far more damage than 25 basis points would,” he said.
Ross said central bank officials are agonizing too much over such a relatively small move.
“If all that’s keeping our economy together is 25 basis points, we got nothing going on, anyway. So I think it’s ridiculous to make such a big to-do out of a one-quarter-of-one-percent potential increase,” he said.
Ross isn't alone in his prediction that the economy is headed for deep trouble.
The Wall Street Journal’s latest monthly survey of economists put the odds of a recession striking the United States within the next four years at nearly 60 percent.
“That is not an assessment that the next U.S. president will cause a downturn,” the Journal explained.
“Rather, it is a recognition that throughout its history the American economy has never grown for more than a decade without a recession. Over the course of the next four years, something—whether exhaustion of the economy’s cyclical momentum, a policy mistake from the Federal Reserve or some outside shock—could knock the economy off course,” the Journal reported.
The current expansion started in June 2009, and has continued for 88 months, making it the fourth-longest period of growth in records stretching to 1854, WSJ.com reported.
“Economists see a 20 percent chance of a recession within the next year, and see those odds rising as the window gets longer. Asked to name the specific risks, a plurality cited the possibility of a global economic slowdown, which could be largely beyond the next president’s control,” the Journal reported.
“We do not think expansions die of ‘old age’ but there’s more probability that a shock will hit the U.S. economy further out in the horizon,” Lewis Alexander, chief U.S. economist at investment bank Nomura, told the Journal.
An investor and businessman who made his billions advising bankruptcies and restructuring flailing companies, Ross was No. 20 in Newsmax's 100 Most Influential Business Leaders in America.
Ross is a force in the steel, coal, telecommunications, foreign investments, and textiles industries. He spent 25 years with Rothschild Inc.'s bankruptcy practice and then founded investment firm WL Ross in 2000. It was acquired by Invesco in 2006. He has spent the recent years turning around troubled banks, first the Bank of Ireland and then the Bank of Cyprus.
Ross successfully bet on the Irish banking system when it was on the ropes. Ross is known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles. As of June 2015, Forbes listed Ross’ net worth at $3 billion.
(Newsmax wire services contributed to this report).