LOS ANGELES—We may be heading for another recession in the next two to three years, according to chief economist for Wells Fargo, John Silvia, who recently spoke at ALIS 2015 in Downtown Los Angeles. Talking to a room of hotel executives, Silvia pointed out that revPAR growth peaks in the middle of a cycle, not at the end, indicating that we may be close to the next recession.

Silvia pointed out that peaks come at mid-cycle because by the time developers realize demand has increased and begin construction, we are already at the middle of the cycle. With revPAR peaks happening now, that indicates we are about two or three years away. However, this will likely be the best year in the economic cycle.

For the next two years, Silvia estimates the economy will grow at an average of 2.5% with a spike in manufacturing jobs. For the hotel business, New York, San Francisco, Miami and Los Angeles continue to be hotspots, while Charlotte and Nashville are leading the nation in revenue growth and tourism. During this time, corporate profits are expected to grow as well, which will lead to increases in business travel.

For those concerned about inflation, Silvia pointed out that the consumer price index's 1.5% inflation rate is actually an average of commodities and services. While the commodities rate is running at a 2% increase, services is actually trending at -.5% inflation. Currently average occupancy rates are trending above the historic average of 69%. This sounds great, but can lead to problems in terms of prosperity—are hotels going to be able to satisfy expectations for the increased number of guests?

Silvia isn't the only market expert that believes we are coming near the end of the cycle. In a recent interview, Paul Rutter, a partner at Gilchrist & Rutter PC, said that he believes we are in the 7^th inning of a 9-inning game, as economic cycles tend to trail in 10-year runs.