Newspaper article The Christian Science Monitor

Banker Suggests Recovery Half Over

Newspaper article The Christian Science Monitor

Banker Suggests Recovery Half Over

Article excerpt

DAVID McHUGH says the economic recovery in the United States, based on the history of past recoveries since World War II, may be already close to half over.

Considering that many of us only found out recently that we are no longer in a recession, that is not cheering news.

Yet Mr. McHugh certainly does not sound like a wild-eyed economic theorist. Soft-spoken and collegiate looking, he is a vice president and senior investment officer with Northern Investment Counselors, a division of Northern Trust Company, Chicago. Northern Trust has an estimated $500 billion in its various accounts, and McHugh's investment operation directly manages about $4.5 billion of that.

Northern Investment Counselors looks for quality growth stocks for wealthy individuals. (His minimum investment: $2 million.) McHugh says that quality growth issues are particularly important during slow United States economic growth.

McHugh's argument about the recovery is that the average period of expansion in the US runs about 44 months. Yet the last recession, so we have been told by the National Bureau of Economic Research (which officially pinpoints the turns in the business cycle), ended in March 1991. That means we are in the 22nd month of recovery, or close to the end of the second year of the expansion. McHugh says that despite economic indicators suggesting continued recovery, he is "wary" of the stock and bond markets.

Northern Trust economists see US real gross domestic product growing around 3 percent in 1993 and 1994; McHugh personally is concerned about a possible market correction late next year "that could run more than 10 percent."

McHugh likes certain capital-goods stocks, the financial area (although not big money-center banks), and some technology stocks. His investment division invests in a list of 40 stocks, after screening up to 7,000 companies. …

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