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Brian Levitt, senior economist at Oppenheimer Funds, on the upcoming ‘fiscal cliff’and how it is impacting the market.
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Closing busy week for economic data -- reports out on everything from industrial production to retail sales that's actually were both up.
But our next guest says the biggest factor weighing on the economy right now is the big all -- -- -- And lying doesn't think we're gonna go over -- we stop he -- our economy is time we too closely to the political cycle.
Joining us now Brian Levitt senior economist at Oppenheimer Funds.
Okay Brian you know the consensus out there is that we're not going to go.
Over right and it never presume the eleventh hour they're gonna come up with something but me right now that he made that we should.
Maybe we should just take our medicine already let the spending cuts kicking in and let Washington wake up could your point is a good one week follow a political cycle now.
Well that is correct I -- I don't I'm not an advocate of going over the fiscal clip on January 2 -- thirteen.
I think the market is giving us time.
To put together into what amounts to a long term plan for fiscal consolidation so I don't think we should take austerity all at once certainly when.
The US government's borrowing at an average maturity interest rate that's lower than the rate of inflation but.
If you come out of this election with Al would either party having a mandates.
Pursue a plan towards towards long term fiscal consolidation then.
-- the economy -- runs into trouble.
Financial markets front of the troublesome what you need to see is.
Some extension of some of these you know extend the bush tax cuts extend the AMT patch.
But we need a long term plan over time it's to lessen our debt.
This is slow drip -- it's so painful for -- people especially people on main street right.
And economic data is so confusing.
I mean you have CPI unchanged but food prices are up single family home starts are down multi families are up.
And -- home builder sentiment is I mean nobody knows which way we're going in as a result it just creates inertia.
Well it does that mean this is very consistent with the aftermath of a financial crisis.
We we -- talked about this years ago how this was going to be a prolonged slow recovery.
With some fits and starts but generally eight.
A rate of growth that was somewhat below the trend levels that -- come to expect in the data continues to be very consistent with that now we shouldn't forget what some of the data showing us -- that there are some good things going on for the US economy.
Housing is contributing to growth -- we've seen.
Inventories for existing homes come down pretty significantly.
You see the household deleveraging process.
Moving along and you of how you of homes.
Far -- -- very low interest rates these -- of the debt service ratio is down you also have this new energy.
Renaissance in the United States and there's a lot of good things working for this economy.
What continues to hold -- back is the uncertainty politically on both sides of the Atlantic that prevents investors in -- business owners from acting with confidence.
So what do you what what do you tell people right now we town working out -- main street -- small business guy.
Wait till the election and -- just be on hold till November 6.
Well I think bed you know we we what we can we advise more advisors -- we do small business owner so we talked to investors were were talking about is how.
Keeping your money in cash is certainly not a great investment strategy here you're obviously not keeping pace the rate of inflation so you're not maintaining your purchasing power.
For investors that want to maintain some government assets they probably want to look to diversify some of that whether it's into.
Higher yielding securities or international investments but over the long term -- investors are gonna be better served as in the equity markets now.
That doesn't mean that there's not gonna be some uncertainty around the election there could be some volatility in these markets.
But over the long term you know inflation and growth -- going to be part of the way that you get out of this debt spiral and equities should do pretty well and that type.
-- remember that best overriding story is get in the equity markets just.
Really hard to even wanted to your -- based on what's happening in DC these days Brian -- -- thanks so much your view of us on Friday.
