The global economy shows few signs of improving even as the U.S. continues “to muddle through,” Goldman Sachs Group Inc. President Gary Cohn said.

“I don’t see this changing,” Cohn said Friday during a panel discussion at the Institute of International Finance meeting in Washington. “We keep saying we’re getting closer to the end, but I don’t think we’re getting closer to the end.”

The International Monetary Fund this week kept its estimates for worldwide growth unchanged from July and said rising political tensions over globalization are threatening to derail a recovery. The global economy will expand 3.1 percent this year before accelerating 3.4 percent in 2017, while the U.S. economy, the world’s biggest, will grow 1.6 percent this year, down 0.6 percentage point from July’s estimate, the IMF said.

As individual economies have become more connected and monetary policy more intertwined, central banks have lost their ability to promote growth, Cohn said.

‘Ineffective Cartel’

Central banks “are an ineffective cartel now,” Cohn said. “We no longer have independent countries with independent central banks that can drive economic growth or contract economic growth within their own countries. We have a globalized world with a globalized work force and we therefore have a globalized monetary policy.”

In Europe, the economies can’t handle higher interest rates without a “retooling of the entire economy,” said Sergio Ermotti, CEO of UBS Group AG, who spoke at the panel.

Uncertainty about the outlook for growth is crimping corporate revenues and causing business leaders to avoid risk, Cohn said.

“Corporate CEOs are not wanting to take risk and are wanting to be very conservative,” Cohn said. “What’s really happening in corporate America today is we’re seeing very little top-line growth.”

The outcome in the U.S. election is unlikely to have a long-term impact on markets if history is any guide, Mary Callahan Erdoes, CEO of JPMorgan Chase & Co.’s asset-management unit, said at the panel. Markets have tended to shrug off major geopolitical events, she said.

“You don’t actually have major effects on global capital markets,” Erdoes said. They “tend to rebound within three to six months of any major shift.”

Source: Bloomberg