article , video 09-15-2014

Prospects for the U.S. Economy

Chief Executive Officer Chuck Royce discusses potential drivers of economic growth with President Chris Clark


Chris Clark: Chuck, what are the things that you're watching out for going forward in this environment where interest rates could be going higher and different sectors of the economy could be doing different things? What are these various economic factors that you think and perhaps worry about?

Chuck Royce: On the worry side, we're not worried about the same thing. I think a little bit of inflation will be healthy; a little more inflation would be even healthier. Interest rates: I'm looking forward to interest rates rising and beginning a healthy free-market environment for interest rates. I think that will be extraordinarily healthy for the market as a whole. It will be healthier for the economy because I believe it's going to encourage capital expenditures. And that's the missing ingredient in overall growth.

Chris: And what do you think the primary drivers of sort of capital investment are going to be going forward?

Chuck: The M&A cycle is actually going full bore right now, and although the numbers may not show it yet, I think we are well into that going, and that usually precedes CAPEX. M&A is easier to do. It's easier to buy a whole company than to build another plant, so corporations are doing that. I think that's a healthy and normal environment. CAPEX will come next, and I do see plenty of signs that that can happen.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements. 

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