No recession in sight, maybe not before 2024

Some economists warn that President Donald Trump's trade war with China and the deficit-financed tax cuts will accelerate the arrival of a recession.

But do not tell Larry Kudlow, who is positively euphoric about the economy. Trump's chief economic adviser believes that the recovery of the Great Recession, already the second longest in history, could continue until 2024.

"It's possible that a real cycle of growth is ahead of us for the next four, five or six years, "Kudlow told CNBC Institutional Investor Delivering Alpha on Wednesday.

"This (recovery) may not be so long in the tooth," he said.

Not only does Kudlow's prediction defy the consensus thinking of economists, it contrasts sharply with his own caution about the trade war with China.

"At the moment, trade negotiations are sort of stalled," he said. Kudlow added that "we must be careful" to add pressure on Beijing because "they will come to us".

Related: The $ 6.3 trillion man from Wall Street worries about a trade war

Nevertheless, he suggests that the $ 30 trillion Slow but steady economic expansion since 2009 could be just a "prelude" to a "full recovery aside." He predicted burgeoning business spending inspired by the tax cuts of Republican corporations.

It is true that the US economy is expanding. According to a forecast model of the Federal Reserve of Atlanta, economic growth in the second quarter is expected to reach a rate of 4.5%.

"We get 3%, maybe 4% for a quarter or two, which can be positive," said Kudlow. "There is no recession in sight."

Federal Reserve Chairman Jerome Powell echoed this part of Kudlow's perspective before the House's Financial Services Committee on Wednesday: "We do not expect a recession, we do not really see a recession. "

However, few economists – if any – claim that the recovery lasts until 2022, let alone in 2024.

For starters, it is too difficult to see so far. Economists are struggling to predict the next few quarters, let alone half a decade.

In fact, some believe that the risks of a slowdown in a few years are rising – at least in part because of Trump's policies.

"It's possible, but it's unlikely that the current expansion will continue for another five or six years," said Mark Zandi, chief economist at Moody's Analytics, in a statement. email sent Wednesday to CNNMoney.

million. Zandi said the main obstacles were anti-trade, anti-immigration and deficit tax cuts financed by the Trump administration and increases in government spending.

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Unemployment is so low – almost the lowest in half a century – that companies end up running out of workers unless to change their laws. "Given these policies," said Zandi, "the most likely scenario is that the economy will overheat this year and next year, with rising interest rates, and result in a recession at the beginning of the next decade ".

Ken Griffin, the billionaire hedge fund CEO Citadel, told Delivering Alpha that the risks are greater today than 18 months ago.

While Griffin expects a "strong growth" over the next six to nine months, in the absence of a "catastrophe" on trade, the prospects for the end of 2020 and 2021 are "much more obscure". He argued that Republican tax cuts have "pulled up" the demand.

Related: The Chinese economy slows down as commercial struggle begins

Kudlow proposed a solution to this problem, however: more tax cuts. He said the White House is considering a second tax cut. Although nothing has been finalized, Kudlow noted that some lawmakers want to make individual tax cuts permanent.

"You can see not only a 2.0, but a 3.0," said Kudlow.

But some economists and investors are already sounding the alarm over the US debt explosion. The non-partisan Congressional Budget Office estimates that the tax law will add $ 1.9 trillion to the federal deficit until 2027.

Economists warn that by increasing the credit card now, the Congress will have less room to borrow the next recession.

Jeff Gundlach, the billionaire investor who predicted the subprime crisis, said last month that he feared that Washington would move to a "suicide mission".

The federal government usually borrows from juice growth during a recession, not when unemployment is very low, as is the case today.

"Reducing the deficit-financed tax cuts now," said Zandi, "is precisely the wrong policy at the wrong time."

– Donna Borak of CNNMoney contributed to this report

CNNMoney (New York) First published July 18, 2018: 12:41 ET