Stephen Schwarzman says he has lived through seven major market declines or recessions in his 50 years working on Wall Street. The CEO of Blackstone Group lists them in his new book What It Takes: 1973, 1975, 1982, 1987, 1990-1992, 2001, 2008-2010. Through all those experiences, he writes that there are “simple rules” for identifying them.
So what about now? Is the U.S. headed into a recession as so many economists and market pros are predicting?
“It’s unlikely now,” he tells me, adding, “but that doesn’t mean we won’t have a lower growth rate.”
Despite signs of a slowing U.S. economy and a tug of war with China on trade issues, Schwarzman says a strong labor market, low interest rates and healthy consumer spending are propping things up.
“Consumer buying is going up,” Schwarzman explains. “If they continue spending that money, we’ll have a longer run. But there’s no doubt that 4 percent type growth, 3 percent growth would be very challenged now.”
Schwarzman is in a position to know. Blackstone, the investment firm he co-founded in 1985, has business operations all around the world and its clients are among of the biggest and most powerful companies internationally. It is ranked on the Fortune 500 list of the biggest companies in America and has more than half a trillion dollars in assets.
What worries Schwarzman the most right now is the China trade conflict. He says if the U.S. and China cannot resolve their differences, he fears they will drag down growth for the world economy. From years of doing business in China, Schwarzman is plugged in to what government officials and business leaders there are thinking. He gives a glimpse into what to expect from the negotiations between President Trump and Chinese leaders in October.
“Their perspective is ‘we want to open but we’d like to do it on our schedule, not yours,’” he says.
Watch the video above for more from my interview with Schwarzman.