Associated Press

Blackstone's billionaire boss says the risk of a US recession has fallen, fears of a downturn are "overblown," and the American economy will be "fine," according to Financial News.

"The consumer economy in the US is doing extremely well," CEO Stephen Schwarzman told the news outlet. "We have the equivalent of full employment. We have very limited immigration, and so the labor market is getting quite tight and wages are going up."

Blackstone's chief investment strategist, however, has sung a different tune.

Joseph Zidle recently flagged the "mother of all bubbles" and other warning signs of an approaching recession.

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Blackstone's billionaire boss says the risk of a US recession has fallen, fears of a downturn are "overblown," and the American economy will be "fine," according to Financial News.

CEO Stephen Schwarzman's new comments diverge sharply from those of the private-equity giant's chief investment strategist, Joseph Zidle, who has flagged the "mother of all bubbles" in sovereign debt and other warning signs of an approaching recession.

Schwarzman highlighted robust consumer spending, low unemployment, and rising wages as evidence of a resilient domestic economy, Financial News reported.

"The consumer economy in the US is doing extremely well," Schwarzman told the news outlet. "We have the equivalent of full employment. We have very limited immigration, and so the labor market is getting quite tight and wages are going up."

Higher incomes are being matched by crushing healthcare bills, student loans, credit-card debt, and other costs, forcing consumers to keep spending.

"For the first time since the financial crisis, wages are going up faster than inflation, so the average worker has more money in their pocket," Schwarzman said. "The average worker is also under financial strain, so that money will go right into the economy — it won't go into savings."

He also credited the Trump administration with fueling growth.

"It's pretty clear that the current government has been good for the business community and for economic confidence," Schwarzman said.

He warned, however, that growth could suffer "if consumers lose confidence" because of geopolitical factors such as the trade war.

But Zidle sees red flags

"I've turned more bearish on the current economic outlook," Zidle said in an October 31 note. "I don't expect a recession in six months, but I don't think it will be as far out as two years from now, either."

That puts the time line from mid-2020 to about the end of 2021.

Zidle listed economic red flags that he feared might be connected.

"The failures in the repo market, negative-yielding debt, a deeply negative term premium, trade conflicts around the world, and a collapse in manufacturing all seem unrelated right now, but I don't think they are random," Zidle said.

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