Carlyle, Blackstone heads paint bleak outlook for US economy

"We never really emerged from the last recession," said Rubenstein, who will be speaking at the AVCJ Forum in Hong Kong in November, Reuters reported. He suggested that it will take a crisis such as a massive dive in the stock market or a steep decline in the dollar to spur politicians to move decisively on the economy before the next election.

The economy is currently growing at a 2% per year and remains vulnerable to shocks like an escalation of the European debt crisis.

The country officially emerged from recession in June 2009 but last quarter's inflation-adjusted economic output fell to its lowest level since the final three months of 2007, when the recession officially began. Unemployment remains above 9%, with economists saying the actual figure is 16% if part-time underemployed workers and those who have given up job searching are included.

Schwarzman added that the already depressed housing market could fall another 3-5% but was nearing a bottom. He criticized a "poisonous political dialogue and the attacks on business" in the US for making companies overly cautious and cultivating a climate of uncertainty that "has basically frozen the economy."

The prolonged period of difficulty threatens the typical buyout model of acquiring undervalued assets, reinvigorating them, and then exiting at a profit within five years. Henry Kravis, co-founder of KKR who will also be speaking at the AVCJ Forum, has noted that private equity deals are becoming more expensive as debt markets tighten and the cost of capital goes up.

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• Topics
• North America
• Performance
• USA
• KKR
• The Carlyle Group
• The Blackstone Group
• Economy
• buyout
• Henry R. Kravis
• David M. Rubenstein