The US economic expansion looks poised to become the longest since the mid-19th century. While growth remains robust, rising policy headwinds have made recession risk top of mind. GS Chief Economist Jan Hatzius believes the Fed will most likely manage to slow the economy without triggering a recession; his base case has the expansion continuing for the next few years. Our strategists recognize risks in areas like corporate debt and shadow banking, but don’t see big imbalances or amplifying factors that could catalyze a downturn. Not everyone agrees. Our external interviewees are skeptical about the Fed’s ability to deliver a soft landing and think a 2020 recession is likely; NYU Professor Nouriel Roubini cites a confluence of factors (potentially including geopolitical conflict), while Guggenheim Partners CIO Scott Minerd worries about corporate bond downgrades. As for asset implications, we caution that selling equities early can be as costly as selling late.

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