 Obviously, we've just heard President Trump talk, give his address to the World Economic Forum this morning. Talk heavily about the US economy and the performance of the US economy in the last few years, obviously, in particular. As you might have, it's the 50th anniversary of the death of George Orwell today. And I was... One of George Orwell's great quotes was, if liberty means anything at all, it's the freedom to say things that people don't want to hear. And I think President Trump was probably exercising that liberty before an audience that hasn't always necessarily appreciated what he's had to say. We have a great panel. Let's say we have a great topic to discuss, which is the relatively strong performance, outperformance of the US economy over a period of time now, but over the last decade or so since the financial crisis. The US has obviously grown at a somewhat faster rate than the other major developed economies. Secretary Mnuchin, obviously, is with us. We'll probably want to talk about the particular outperformance and the slight acceleration in the last few years. But we're here to discuss that, what's led to that, how that's come about, and also about the durability of the US expansion. It's been almost 11 years old. That's the longest expansion in the history of the US economy. And we want to examine the risks to the US expansion, what may derail it, what we can expect over the coming year or so. And to do that, we do have a very distinguished panel. I'm going to quickly introduce them. Glenn Junkin is the co-CEO of the Carlisle Group. Gita Gopinath, the chief economist of the International Monetary Fund. Secretary Steve Mnuchin, you know, the US Secretary of the Treasury. And Jim Fiddling, CEO of Dow USA. I'm going to start, if I may, with you, Secretary Mnuchin. The President did say in his remarks this morning that this was a boom, an economic boom, that the United States was enjoying, the likes of which the world has never seen before. Now, we're going to get into some of the specifics of US performance in the last few years. And there's no question that it has outperformed the rest of the world. And on some measures, there have been some particularly impressive advances. But is it really the likes of which the kind of boom, the average rate of growth over the last few years has been about 2.5% under the Obama administration. It was about 2.2%, 2.3%. In the 1950s, the US grew at 6%. In the 80s at 4%. In the 90s at 3%. Are we really seeing the kind of spectacular boom that the President was talking about? Well, I think we are. And I think you first of all, you have to look at this on a relative basis, not just an absolute basis. So there's no question the US economy is outperforming the rest of the world. There's been a significant slowdown in the rest of the world. And we've had a significant increase since the Obama economy, creating an abundance, millions of new jobs, created a very significant increase in wages while we're growing GDP. And there's no question this is a result of the President's economic program, which we designed during the campaign of tax cuts, regulatory relief, and trade. And I think particularly this year, now we've had a very big week in both signing the phase one China deal and passing the US-Mexico-Canada Agreement. I think these will be very important to the US economy for the balance of this year. Do you think that, I mean, obviously, there was a big lift in boosting growth, almost 3%, 2.9% of growth in 2018. That did seem to be a direct response to the heavy fiscal impulse that came from the big tax cuts passed at the end of 2017. That does seem to have passed, and growth seems to be sort of slipping back in 2019. Estimates around 2.25%, maybe this year around 2%. Did we just get a one-off boost from that huge fiscal impulse, or is this lost? Absolutely not. I would say 2019, again, did well on an absolute basis, was definitely slowed down from, one, the world economy slowing down, so there's no question that China and Europe slowed down pretty dramatically. Also, we had the beginning of the impact of Boeing, the 737 MAX, and we had the GM strike. So there's no question all those issues probably cut about 50 to 70 basis points off of growth last year, and I know we'll hear projections from the IMF and others, but those projections are too low this year for 2020. Gita, let me ask you, do you share the view that the U.S.'s economic performance has been fundamentally transformed? I mean, I think I would agree that, relatively speaking, if you look at advanced economies, the U.S. has been doing quite well. It has many strengths to it. The unemployment rate is at a 50-year low. It has very flexible labor markets, so it's certainly doing extreme bill. But if you want to put a number on what the growth rate is going to be, we have it at 2% for 2020, and we think of it tending towards about one-three-quarter of a percent. I mean, if you remember, 2018, it was 2.9%. 2019, 2.3%. 2%. And an important part from our perspective was the fiscal stimulus that was put in the system. You know, our projection for where we think the U.S.'s heading is driven by our projection for demographics and for productivity growth. Now, of course, those are not... You know, at least productivity growth is not set in stone, and that can be increased. But right now, those are the numbers that we're looking at. Jim Fiddling, if I could turn to you. One of the things that a lot of people have said has perhaps been restraining growth as good as it has been, relatively good as it has been in the last year or two, is concern about trade, about the environment, particularly obviously the dispute with China. That is, at least for now, temporarily resolved. Phase one is done and the U.S. got a lot of concessions, at least, you know, commitments to concessions from China. Is that reasons for perhaps additional optimism about the U.S. economy in 2020 and beyond? Well, I think so. I think some certainty has come back into the marketplace. And if you look at December of 2018, we saw a slowdown globally in the industrial sector in mid-2019. I think mid-2019 everybody was worried about the term recession and people were starting to talk recession. But really, the consumer economy was good. The industrial economy had slowed and there wasn't a lot of investment. So our own PMI and China's PMI had all come down. Now that there's some certainty back in the trade relationship with the U.S. and China, I think you'll see people have a little bit more confidence to invest. I don't think there's a lot to kick in. But I would say that that would bring investment back up. And those are big demand sectors. So automobiles, the aerospace industry, infrastructure, steel, we need those. We need those kicking. Glenn, if I may, Jim raises a number of sectors there and a number of areas of economic activity, where there has been some weakness. One of the most striking weaknesses for the U.S. over the last couple of years is how much of the growth that we've seen has come from a very strong consumer. Now we had these big tax cuts at the end of 2017 which meant a large proportion of which went to a significant corporate tax reform in the form of large corporate tax cuts. We haven't seen any significant, in fact, we've seen a dramatic slowdown in capital spending. Again, how important is the trade picture there and what are the other reasons for that and how might that change? Well, there's two topics here. One is the general evolution of business. And so, over the last really 20 years we've seen business evolve to a much more asset light structure. I mean, the reality is out of the top 10 companies in the Dow, only two of them fully spend their cash flow, the rest of them accumulate it. So overall capital spending relative to cash flow has declined just as business has evolved. And then second of all, and I think it just fits with the decline of trade, which was a global phenomenon. Remember the trade dispute between the United States and China actually spread around the world and in fact it impacted Germany and Japan and South Korea and Singapore much more abruptly than it did the United States. And so, while we've seen manufacturing and industrial output really ebb around the world, capital spending has declined there as well. So I agree, I think we've got a chance with a real thawing of relationships with China and in fact hopefully on a positive note to see positive sentiment pick back up ambition and aspirations in the board room and hopefully we'll see spending pick back up. Secretary Mnuchin, has U.S. growth over the last year or two been held back by concerns about global trade? I don't think so. I mean, I think again it's clearly been held back by a slowdown around the world. We could debate to what extent I think that slowdown was not created by global issues. I think that slowdown was well in advance of trade. But there's no question there was a slowdown and a global slowdown has an impact on global trade. The President once again mentioned today in his remarks that in his view growth would have been stronger if the Federal Reserve had been more accommodating, had not raised rates and so quickly and had cut them more quickly. Do you agree with that? Secretary of Treasury, I'm careful about commenting on Fed policy. It seems a bit puzzling that your boss can criticize the Fed but you choose not to. Absolutely. He's the President. I'm Secretary of the Treasury. So we can expect... So even though you don't think trade has played a role, presumably you think that the Phase 1 trade deal you've got the USMCA that you've got early you did a US South Korea renegotiation you think all of those will actually help to lift growth? That's right. And again, when we talk about growth, GDP is one measure of growth. And again, the way GDP is calculated there's a bunch of things that impact GDP that are one time events. So I'm not particularly focused on kind of whether GDP was higher or whether GDP was lower. What I'm focused on is what did it do to employment? What did it do to labor force participation? What did it do to wages? What did it do to consumer spending? What is the forecast going forward? I think there's no question when we look at the forecast for 2020 business in the US feels very good. And there's no question that now the two trade deals we've done will have an impact this year. I would say on the other side again depending on how long it takes for the 737 MAX to get back into production that's going to have an impact on headline GDP. I've already said publicly that could be 50 basis points in GDP. But again I wouldn't focus too much on the GDP number we could have easily hit 3% if the facts had been slightly different. Gita, that's an important point whatever the GDP numbers there have been some very strong as we said at the beginning some very strong and quite unusually strong performance by the US economy. Lowest unemployment rate in 50 years now well below 4%. At the same time inflation essentially quiescent. No sign of inflation. Very significant real wage gains for not only for not only median wage gains but they do seem to be sort of skewed concentrated towards lower paid workers so this phenomenon this phenomenon of income inequality that we've seen has been addressed somewhat. Do you think these are fundamental changes again that's irrespective of what the overall trend rate of growth may be. We are seeing perhaps a difference between the yield of the fruits of economic growth that we've seen in the past. I think there is certainly good news that the recovery came along with increasing wages at the low end of the distribution. But that said I think it's important to point out that the US is in terms of inequality income inequality and wealth inequality is one of the highest among advanced economies and it was not always that way that intergenerational mobility which is whether your kid will have a higher income than you do those probabilities have come down because there's been unequal access to education and to healthcare. So I'm just going to put out there that I think more needs to be done on that front. We're talking about US economy and resilience. We're talking about raising productivity growth in the US that would require a greater education better outcomes on that front and more needs to be done there. And if I may I would also say that the US tax system could be some more progressive. There are some low hanging fruit. There are some very wealthy individuals who can redefine labor income as capital income. This is the carried interest provision that's there in the income tax system. I think that needs to be got rid of. It's just not right for the times and similarly when it comes to taxes there is a windfall to beneficiaries of wealthy individuals. So these are kinds of low hanging fruit that I think need to be addressed so that going forward there is more opportunities spread around not just across people but including across regions. So because if you look at the unemployment rate at three and a half percent for the country as a whole but if you look at the unemployment rate and say in New Mexico or in Mississippi they are significantly higher and those are lagging behind. And I think for the US resilience is very important to bring those regions back up. Before we get on to the issues of resilience can we just explore a little bit what again we all agree here and the numbers are arguable. The US has enjoyed stronger growth over the last decade than indeed longer than that but certainly less focus since the financial crisis over the last 10 years than Europe and obviously Japan you know at least 50 percent higher than European growth rates and twice twice Japan's growth rates. So what are the different factors that are responsible between demographics between structural issues between policy what in your view are the key reasons why the US is though historically may be growing slower than it has is certainly out performing the rest of the world. I have to say if we were all here exactly 10 years ago and we took a poll of hands and said how many people think that the United States is going to be a larger share of GDP in 10 years raise your hand. I very few of the United States is 25 percent of GDP when it was just 23 percent 10 years ago. Why is that? We tend to see four things brought to bear that continue to make us extremely confident investing in the United States. First is the labor markets incredibly skilled robust flexible labor markets with now one of the challenges is finding labor and I think that's one of the things we're going to have to address over the next 10 years is we really do nearly have full employment the second is the robustness of the capital markets. I mean nearly 50 percent of the equity capitalization of the world is on US exchanges there's great formation of capital and as a result when businesses want to grow and see capital they can find it readily available third is the rule of law and I think at the core we have a great judicial system and we understand contracts matter and we can rely on that and I think finally is a culture of innovation I mean the US leads the world in R&D spending and patent filing and while we do in fact have a wonderful bankruptcy code to deal when things don't work we take risks and when you take risks you have a chance to actually take a big step and the aggregation of those four elements tend to result in really strong performance and so as we look across the world there's great places to invest all around the world we're a global investor but we remain very very confident in the dollars we put to work in the United States. Jim and I would add the other one would be energy competitiveness made a big difference and so if you looked at half of all the manufacturing capital that was invested over the last 10 years it was in energy intensive industries so as you're trying to build back a manufacturing industry in the United States those investment dollars had gone elsewhere you had the recipe for success you had tax cuts in there and you get yourself on a more competitive basis and there you go and then I think to the wage disparity issue you know if you look at science technology engineering and math jobs I don't think it's true that the next generation won't be able to make more than the current generation but in some other areas that may be true in science technology engineering and math there are great careers and great opportunities out there and the starting pays are very very good we just aren't graduating enough and we need more we need to encourage kids more to get into those fields when they're in grade school and get them interested in science Secretary the president talked today as others have to about the importance of deregulation and one of the things that your administration has done in the first three years has been significant deregulation in areas like energy or labour markets where as other fields like that what's what's more to be done on that what's wouldn't been achieved there and how has that changed economic performance and what's more to be done let me just comment before I get to this I do want to just emphasize what you said on energy I think the fact that the U.S. is now energy independent that we have an abundance of natural gas cheap energy I think is a very big deal it's a very big deal on a geopolitical basis but it's also a very big deal on an economic basis and one of the reasons why we've had low inflation and I think you'll see very low inflation in the near term on deregulation let me be clear we believe in proper regulation we just don't believe in over regulation and I think this administration has just a different philosophy that big businesses create small businesses that create jobs we want to make sure that businesses are regulated properly but I think you saw the pendulum swing way too far after the financial crisis banking regulation we got to the point where basically regulators were telling regional bankers how to make loans regional bankers know how to make loans that wasn't the problem I think where there's a lot more work to do is on infrastructure the president would love to do a trillion dollar infrastructure program one of the big issues around that is making sure that we can get the permits through the system both at the state and the federal level so I'd say that energy pipelines and infrastructure are big areas where we'll continue to work on deregulation let's talk about energy because obviously as well as being of significant benefit to the US economy I don't think anyone would disagree with that over the last few years there are those in addition to the president today there's a certain 16 year old schoolgirl wandering around who perhaps will not have the same positive view about policies that result in significant additional fracking energy production traditional carbon rich energy production is it possible to achieve the kind of gains that the United States has made in energy self-sufficiency while at the same time at least acknowledging some of the concerns that people have and maybe doing some more to restrain the carbon emissions well I think the US has done a lot and when you look at the Paris agreement we thought it was unfair agreement so there's no question that there are countries that China is one of them that have a lot of work to do in terms of environmental issues India has work to do there's a lot of countries if you look what the US has done in terms of carbon emissions and the progress we've made independently in the markets I think quite frankly it's very impressive so I think there's definitely a shift towards clean energy in the US there's technology that is much more abundant for liquid natural gas and clean things we were talking about before you know I drove a Tesla when I was able to drive a car in California and I like the fact that I had an electric car so people but nobody talks about well how is the electricity generated and then nobody talks about how are those batteries going to be disposed of and what does it do so there's no question we want to have clean air we want to have clean water we think there's a way to do it and be energy independent I think to Secretary Mnuchin's point you can do both you can grow the economy and you can bring the emissions down we've done that natural gas was always meant to be a bridge fuel to a future economy so there's a transition that we were going to go through I think there's a little bit of an argument of how long will that transition be how long does it need to be storage has to be addressed before we can really get to alternatives that are going to be cost efficient so if you went today and you made the move completely to alternatives and you said we're going to not do anything with natural gas you would drive up your electricity costs to the point that you have more wage disparity issues electricity demand would go up like we've seen in Germany 10% increase but there's no nuclear power now I've got to look for alternatives to burn coal to make that energy you get yourself into a set of policies that drive you in the wrong direction and I think what we're trying to do is get ourselves into policies that drive us in the right direction bring those costs down and manageable we can still bring CO2 emissions down it doesn't say we're not going to have a future where alternatives are important but so far for big industry we haven't found an alternative that's cost effective and rapidly developing and very effectively developing cheap, reliable and sources of energy that dramatically improved US energy's self-sufficiency and security do you think that they got the balance economists will think we got the balance right between doing that and contributing to the US economic performance in the last 10 or 15 years and meeting the obligations that everybody thinks we have towards addressing the climate challenge Secretary is right when he pointed out that one of the reasons why inflation has stayed so low for most of the world especially advanced economies is lower energy prices and it's also important to point out that despite the recent tensions in the Middle East there was no big spike in energy prices and this has to do with the resources of supply and those typically were events that would trigger crises around the world and that hasn't happened but that said I don't think one can sit back and wait because in terms of what's happening the consequences of climate risks it's very salient to us at the IMF because we track 189 member countries and there's always several of those who are downgrading because there was a natural disaster this is Japan, this is going to happen in Australia and so it is an economic there's really economic cost to it you know regardless of how you feel about what's going to happen as a company if you are exposed to climate related risks that's going to affect your bottom line just in terms of your financial exposure to it and you have to be prepared for it so I think it's something that countries have to respond to now I mean it could happen organically it could happen in a much more directed way I mean our view is that it should be more directed there should be more infrastructure spending on climate there should be more carbon pricing but I don't think this is a can that can be kicked down the road Glen let's talk about let's come on to this issue of the resilience of the US expansion as I said it's the longest expansion in history ten and a half years old already normally at anything like this stage of an expansion you're starting to see significant imbalances that typically derail an expansion you know rapid wage growth maybe leading to higher inflation forcing the fed to raise interest rates maybe there are significant imbalances the form of financial bubbles there are some issues here about valuations whatever we don't seem to be seeing any of those kind of problems that you normally associate with a very long expansion so first of all why not and secondly what are the risks yeah I think first the economy is quite different today than it was 20 years ago and if we were 20 years ago and we had the manufacturing sector bumping along like it is we might be on the edge of wondering if we were going to slip into a recession but given the strength of the service economy today and the strength of the consumer the US economy is in fine shape and so we have much bigger buoyancy today than we've ever had before and that allows for a sustainable economy I think we are not seeing excesses listen asset prices are high when you're in an environment with you know 2% growth and low interest rates around the world asset prices are naturally going to be high and we don't see this changing we see interest rates staying low for the foreseeable future we see growth being modest although we do think it has a chance to pick back up with the recent progress on the trade agreements and with the brexit resolution but asset prices are going to stay high and I think that's a bit of our new reality and therefore that is an economic backdrop I know you're not in the stock market prediction business but we saw a remarkable run up 30% plus run up in the S&P 520.19 you're thinking though that can be sustained you probably don't expect to see another 30% but you don't see that there's any significant risk of a reversal well the good thing is that what Carlisle gets to do is own businesses for 5 and 10 years and so I don't have to make any annual bets but the short answer is I think the stock market is anticipating exactly what we've been talking about which is the recovery of global trade and therefore the economic growth that will run underneath it and I think a lot of that's going to depend on the productivity of the relationship between the US and China and it seems to be off to a good start I think it was great that in fact the moniker of a currency manipulator was addressed I think the overtures in China of the receptivity to business and the ability to actually invest wholly as opposed to a joint venture all the time is a tremendous step and so I think the stock market ran ahead of the actual economic results in anticipation of this recovery Secretary Mnuchin one imbalance there is that some people have drawn attention to is a remarkably dramatic decline in the fiscal position we've seen a trillion dollar deficit for the US and Canada 19 looks like it's going to be around for a while 5% of GDP I think I'm right in saying that with unemployment at 3.5% after 10 years of growth we've never seen that level of fiscal deficit we are normally by this stage you're building up significant fiscal surpluses and yet no one seems bothered about it the bond market certainly doesn't seem bothered about it we've got 10-year yields still around 180 most economists don't seem to bother about it your rivals in the Democratic Party are planning to do even more and expand the deficit by even more just stop worrying about fiscal deficits well let me make two comments on this first of all I think you have to look at government debt relative to GDP I think where we are now is fine but I think we have to look at over time what's the rate of growth of government spending so I think as I've mentioned you know I'll stay on the record that I think tax cuts will pay for themselves first two years our projections are right along but what we also did is we had increased government spending and the president wanted to have more spending on defense to get that the Democrats wanted spending on non-defense so I think there's no question over the next few years we are going to have to be careful in looking at slowing down the rate of growth of government spending so where is that where is that pressure going to come where are you going to look to restrain fiscal the public spending growth there is I think that I mean first of all we've now made a major investment in our military so I think the rate of growth we don't need to continue at necessarily the same rate of growth we can slow down so I think it's not necessarily cutting it's basically slowing down the rate of growth of government spending and what you're going to see the tax cuts were front-end loaded with automatic depreciation and things that incented people to invest now and you're so I do think that we're going to see revenues begin to pick up and as I said we're right on our projections for the first two years so we do have a situation where by although things are looking pretty set fair for the US economy you do have this very unusual situation where you have very little limited monetary room for maneuver the Fed is already it's cut rates in the last year it's still got 225 limited by historic standards very very limited fiscal room for maneuver should that be a concern for policymakers that should there be a downturn the ability to respond in the traditional ways is significantly attenuated I mean so firstly I would just point out that relatively speaking here again I mean the US central bank certainly has more space than the ECB or the Bank of Japan now the typical recession in the US has gone along with what a 500 basis point cut there's no 500 basis point cut space but what the what the evidence seems to suggest is that forward guidance and quantitative easing and these unconventional tools certainly can give you that extra 200 or 300 basis point but of course there's a limit to how much you can go there because at some point these things can have negative effects so I just want to flag two things fiscal policy will have to play an important role if things were to get you know surprisingly bad and in this particular area the US actually the response on the fiscal side has been slower so if you look at the global financial crises US fiscal response took much longer than pretty much all of the G20 countries did so it might be a time to think more of a kind of a cyclical fiscal rule where you know you have much more automatic spending which comes through either transfers from the federal to the state level or unemployment insurance or public investment projects are in the pipeline so if you can increase the automatic nature of it that would certainly help with resilience I mean at one point one more thing about resilience right now given environment we have a very low interest rates I think one area that we might pause for concern is what's happening with corporate leverage and corporate debt and we've certainly seen that go up a lot and that is clearly in the purview of the secretary Fsock is under you and so that's actually one area where something can be done in terms of right now there is no regulation for corporate debt and it's not necessarily the regulation or oversight which is the more appropriate word but you know there's nothing to panic about at this point but it is something to think of as if it is the case that it's not the problem is no longer the banking sector but corporate leverage is the problem I want to come back to corporate leverage but Jim I just want to quickly ask you about potential constraints to continued growth from a manufacturing perspective more broadly from a whole economy perspective and that is the labour market which we've talked a little bit about we have historically low unemployment rate three and a half percent as we said at the beginning we are starting to see significant wage growth that rising quite significantly the demographics again the United States is in a better position demographically than probably any other major developed country but they're not great immigration and the economy is somewhat restrained the sort of organic demographics are not particularly good how much of a concern of a problem do you face from your perspective with just a very tight labour market so if you look at manufacturing today 25% of the workforce is within five years of being retirement eligible and so there's quite a bit turnover that's coming there are a lot of work being done with apprentice programs in our industry all around the country and apprentice programs to bring veterans back into the workforce are full and they're graduating with 96, 98% placement rates very high quality jobs so we're able to fulfill it I think the other point I would have raised to Glen's point about the economy being so different than it is the digital economy is where it is today 20 years ago we couldn't afford to do things that we can do digitally today and that helps us a lot with productivity it helps us a lot with advanced manufacturing and automation that takes a little pressure off of the manufacturing job now it puts pressure on the tech sector obviously but I think all in all that's a net benefit to the economy and the more that we invest there the more important it is we have to get infrastructure right that would be a big boon we're going to have to do that with government and private funds and if we can do that right and design the infrastructure of the future that could really be a step up in investment in the US I want to let Glen speak too but on the productivity issue despite the huge investments in information technology over the last 20, 30 years all the evidence is that labor productivity is actually weaker than it's been that continues to be one of the great one of the most striking features of the modern US economy could you have a good explanation for that is there an issue going on or do you really think that somehow these investments are not really translating into any product? I think if you're looking at it at a broad US basis you could draw that conclusion but I think if you went down into industries that are investing in new technology and investing in automation you might find differences you might find other industries are still able to make productivity internally we set targets every year to at least do that and that means we have to look at investments and other things to make that happen Secretary, the US economy has been a jobs producing machine for a long time two and a half million jobs a year we've set the unemployment rate very low how much longer can that go on given the inevitable constraints on labor supply? I think there's a lot of things we still need to do talked about apprenticeship programs need to make sure there's better education programs for skilled labor we need to make sure that people who are getting advanced PhDs we can keep them working at our companies I do think the participation rate can continue to go higher I think productivity we can spend a lot of time talking about why productivity is where it is but I think there's upside in productivity and I think the president wants to fix immigration that's part of it so that legal immigration has to ultimately be part of the equation I would just add there's a million more job openings than there are people willing to take those jobs today in the United States and so we're going to figure this out because we have to and when you look at the opportunity to sell a new product or open a new facility or launch a new service and if you don't have the right folks to do it go find out how to do it and you come up with a job training program and you go to the service alumni fairs and you literally business is going to figure this out because we have to the economy is growing there's new job opportunities and we need to fill them let's talk about this corporate debt corporate leverage has dramatically increased in the last 10 years or so as you mentioned FSOC is your responsibility and financial regulation generally have you seen anything at all that gives you concern in terms of this significant growth in debt companies have been buying back a lot of stock taking on a lot of debt in part in order to do that is there anything that gives you any concern there so this is something that we're monitoring very carefully and the short answer is no there's nothing that gives us a level of concern although we'll continue to monitor it but let me just make a couple of comments first of all debt in the regulating banking sector is very reasonable so you know where you have companies that are borrowing whether it's covenant light higher loan to value loans and things like that those have moved outside of the banking sector and a lot of those have gone into CLOs and other private equity form where you have you have long term stable capital so I don't think it's an issue obviously having high debt in certain industries carries certain risks relative to other industries but it is something that we are carefully monitoring and people talk about leverage lending and yes there's more leverage lending but we're comfortable that's not in the regulated banking system and a lot of this boring a lot of this corporate leverage has been on these sort of so-called covenant lights again that doesn't that those those kind of when you don't think we're in any danger of seeing the kind of financial excesses that we saw that led to the subprime crisis in the 2006 I don't I think that was a very different situation again in the mortgage market although you've seen some increase in mortgage lending in certain areas again you don't have anything like what was clearly you know wholesale uh mis-underwriting of mortgage credit Glenn do you on the corporate leverage side I agree with everything that's been said and would add listen there's a prudent level of debt for every company and responsible owners try to find that level of that particularly in our industry um and it has a lot to do with interest rates as well so as interest rates are low companies can afford a little bit more debt and we think interest rates are going to stay low for quite a long time and we think that that balances are pretty are pretty reasonable I do have to say that as asset prices have gone up the amount of equity that goes in has increased substantially and so back when I started my career 25 years ago capital structures may have been 25 percent equity and 75 percent debt and it's routinely 50-50 today and so the equity cushion that's involved in most capitalizations today um is substantial is substantial Jim from your perspective you know I think um on capital intensive industries like ours the market does a pretty good job of regulating that and the credit agencies take a good look at that I can't speak to what's happening in some of the other parts of the market but in our in our space I think we've got pretty good balances in the market already we've got a few minutes left I want two two quick rounds if I may first is I want to ask all of you what do you think the largest risk is and Secretary you're not allowed to say Bernie Sanders if I may say so um but I'll let you so you can say Bernie Sanders if you like um the largest risk is to this continued US expansion so Glenn if I may I'll put you on the spot and start with you yeah I I think it is to it is confidence and I think as long as there's confidence in a regulatory framework and in policies that we can depend upon um because um business is going to be predisposed to assume that that this expansion will die of old age and because because economic expansions don't really cease due to anything else I mean there's excesses and they don't really die of old age and so I think that there's going to be a preconceived expectation that eventually it'll have to come to an end and therefore we'll be looking for it and just like we had earlier this year where there was some concerns um that you know maybe the trade deal wasn't going to get done and then all of a sudden in September we see concerns about recession it was all sentiment driven and not substance driven and I think that's our biggest our biggest concern do you think the trade the phase one deal with China the USMCA getting through Congress Brexit getting done as it were whatever comes of that this year do you think that has significantly and will improve sentiment in US corporates over the next year yes but it does has it gone? the fears of a sort of broader trade by no way gone but a substantial step forward a substantial step forward but it needs to be followed up with the next stage of everything a big risk for the US economy the way I see it one reason we've seen the stabilization recently and in general I think a bit of the glue that's holding the world together are the easy financial conditions the low interest rates countries that are basically not growing able to borrow at incredibly low rates very small spreads so a risk I would describe as something that triggers a change in those conditions particularly because the Fed raises interest rate but because there's a huge increase in risk premium and you could see that occurring for instance if there were a sharp increase in policy uncertainty we saw that whenever there was uncertainty on the trade policy front we saw markets moving around very quickly so if you take a combination of incredible uncertainty on the policy front in the Middle East geopolitical risks social unrest I mean these kinds of issues could be a trigger that suddenly now the market reacts or overreacts financial conditions tighten and then this kind of nice happy balance we are in gets lost Mr. Chairman you don't want to put it perhaps in terms of negative risks than other than Bernie Sanders, Elizabeth Warren Pete Buttigieg and Joe Biden and maybe Mike Bloomberg what keeps you awake what are the things that you're very much focused on right now? Good thing is I sleep pretty well at night but I will say and you gave the answer I won't pick which one but I think political risk economy you have two very different visions for the way the economy will be managed and business opportunities so there are some very extreme socialist type of economic programs you got some of the candidates I won't say which one that want to regulate the top 100 US corporations and set up a new agency in the government to do that there's no question you see very different views of banking regulation so I do think in the US there is two very different views of politics that will change economic outlooks dramatically Jim for you Access to global markets and making sure that we build back our ally relationships around the world the US needs global markets to be able to export goods and services and technology and I think part of the biggest kudos to Secretary Mnuchin on the China deal phase one was access to the financial markets access to those markets is very important for us it's not just our industry on a free and a fair basis Final question for all of you very quickly Glenn you noted that expansions don't die of old age the US expansion is more than 10 years old let me ask each of you very quickly what are the chances that we come we're here in 2025 and this expansion is still going absent some material geopolitical issue and I think which we don't expect to happen I think that we will still be in a period of low growth low interest rates and high asset prices in 5 years Lisa like I mentioned we have a projection for 5 years from now which is at 1 and 3 quarters percent but you never forecast the recession to be fair by their nature times are changing there's a new chief economist who knows things can happen that's where we see it there are many risks I would say policy is a big one including related to what happens in the next 12 months in the US I'd say especially the next 2 to 3 years where I think we have very good visibility into the economy and also certain global issues I think we feel very strong about the economy I think the corporate debt is high because there was a lot of investment made in manufacturing and so the next couple of years even if we have low slow growth it's going to absorb that capacity and I think we're going to see an expansion over this next 5 years well there you go ladies and gentlemen economics is supposed to be the dismal science but I think we've left you all with some prospects for the US economy with admittedly some risks that we will see but I think the general belief is that the causes and the roots of this US expansion are pretty solid and that as far as we can see especially with improving international climate perhaps for trade and international economics then the expansion prospects remain pretty good so please join me in thanking our really very distinguished panel thank you thank you