BNY Mellon’s chief economist Richard Hoey expects several more years of recuperative economic expansion, according to his most recent Economic Update

“We doubt that U.S. fiscal policies will be dysfunctional enough to generate a recession,” said Hoey. “Fiscal tightening in 2013 should be only about 1% to 1.5% of GDP, much less severe than the fiscal policy embedded in current law,” he continues. “After the U.S. Presidential election, a ‘small bargain’ appears more likely than a ‘grand bargain.'”

In addressing the Fed’s third round of quantitative easing (QE3), Hoey said, “We believe QE3 will provide some net support to the U.S. economy, but the overall impact is likely to be reduced by the tendency of aggressive monetary ease to support energy prices.”

“We have no doubt that the Federal Reserve has the technical tools to prevent a sustained upward shift in inflation,” Hoey stated. “But now that it is helping the U.S. Treasury finance persistent budget deficits and taking responsibility for mortgage interest rates, it is open to question whether the Federal Reserve will have enough political independence to utilize these tools in a timely way in future years.”

Other report findings include: