Low interest rates are a main catalyst for a healthy job market and slow, steady growth, economist Anthony Chan said Monday.
Because of low rates, labor markets are tightening and the country is seeing people “literally come out of the woodwork” to join the labor force, the chief economist for Chase told CNBC’s “Squawk Box.”
He said productivity will improve in 2017 and so will the labor force growth and perhaps even earnings.
“Earnings this year are going to probably be negative for the whole year, but next year, because the headwinds of energy, the headwinds of a stronger dollar, are not going to be before us, I think earnings could pick up,” he said.
“The bottom line here is, energy finally is getting to an inflection point,” Chan added.
Also on “Squawk Box,” UBS portfolio manager Alan Rechtschaffen said the low-interest environment could foretell a positive stock market.
He was concerned about the presidential race because the next president will need to pay attention to the stock market, especially when it comes to government spending and global trade.
“There is a fear of closing down markets, of lacking access to other markets, and I think that you saw that on the British pound and you see that affect the markets frequently,” Rechtschaffen said. “And [for] the candidates, that’s become a front-burner item about whether or not we are going to participate in open trade.”
Chan said creating trade barriers would produce Depression-like results. “If you shut down international markets for the S&P 500, which gather more than 50 percent of their revenues from overseas, it will completely collapse the financial markets,” he said.
“Shutting down markets and becoming isolationist is not the way to go,” Chan added.
Rechtschaffen said whoever is elected will have to move closer to the political center to get legislation passed through Congress.