“[I] believe the most likely case is that we’ll grow in the neighborhood of 2 percent next year,” he told FOX Business’ Maria Bartiromo.
Kaplan spoke to the improvement of household balance sheets and a tight labor market, but did note some signs of weakness.
“Primarily due to trade uncertainties and weak global trade, global growth is weaker, manufacturing is weaker and business investment, as you’ve been talking about, is weaker,” he said.
The “good news,” Kaplan said, is that manufacturing and business investment make up a smaller portion of GDP than consumption. He argued that there could be an issue if those weaknesses spread to consumers, but thinks, ultimately the U.S. has a “good chance” to navigate its way through these weaknesses to growth in 2020.
The weaknesses of domestic investment can largely be attributed to trade uncertainty, Kaplan suggested.
“Because of trade uncertainty and, to some extent, because of the inability to find workers, in some cases [businesses] put cap-ex spending, by in large, on hold. They haven’t canceled projects, but they put them on hold for this year and a good part of next year,” he said.
Kaplan thinks the better investment is possible but still expects it to remain “sluggish” next year.
He argued stabilization in trade is important in order to increase investment and so the volume of global trade is an important indicator to watch, he said.
“Forty-five percent of S&P 500 revenues come from outside the United States,” he noted.
“While we're sensitive to trade in the United States, it’s over 40 percent of German GDP, for example. And so I think that’s still probably the number one issue for business,” Kaplan added.
The World Bank’s most recent data indicated that the total value of U.S. trade was equal to 27 percent of GDP. Net exports, however, only account for a three percent drag on GDP, according to the most recent Federal Reserve numbers.