It’s unlikely we’re headed for a double dip recession, but we are in a “sub cycle slowdown in a sustainable economic expansion,” said Richard Hoey, chief economist at BNY Mellon and the Dreyfus Corporation. At Pershing’s INSITE conference in Hollywood, Fla. this week, Hoey told attendees that while there are some weak indicators, including the unemployment rate, housing, inflation and the dollar, this is not the beginning of some giant plunge. In fact, he expects things to trend upward going forward.

Hoey expects average GDP growth of 3 to 3.5 percent for the U.S. Many developed countries are experiencing a “debt hangover,” as Hoey called it, with an average growth rate of about 2 percent. Meanwhile, many emerging countries have GDP near 6 percent because they’re not recovering from a debt hangover. That puts global GDP at about 4 percent, he said.

But there are signs of economic slowing. The first reason for the slowing is the surge in industrial production from late 2010 into early 2011. The slowdown was also a result of the disruption in Libyan oil experts, which caused capacity utilization to drop, driving up prices. “That shock weakened incomes after inflation.”

The tsunami and nuclear crisis in Japan also contributed to the slowdown, Hoey said, with industrial production declining at an annual rate of 90 percent there in March. And while this has disrupted the supply chain for other countries, he says this is a temporary event, and he expects the Japanese economy to grow at a fast rate during the last four months of this year.

During his presentation, Hoey offered some positive outlook for the year ahead. Three-month inflation will peak at close to 3.5 percent in early 2012 and come back down to 2 to 2.5 percent after that, he said. “It’s not the beginning of a big explosion of inflation.”

Despite the fact that the dollar has been weak recently, mostly because of the U.S.’s easy monetary policy, the dollar will likely stay neutral and start to trend higher once we begin to raise our interest rates.

Hoey also said he expects Federal Reserve Board Chairman Ben Bernanke to keep interest rates low until close to the middle of 2012. He doesn’t forsee the Fed raising interest rates this year. This will cushion the potential downside in the U.S.

He doesn’t see Bernanke implementing a third round of quantitative easing, or a fourth or fifth round for that matter, as the political attack on QE2 changed that possibility. “I don’t think [QE2] had an impact in itself,” so its ending should not have a significant impact on our economy, he said.

As for the budget deficit, Hoey said it’ll be easy to finance in the short term because no one else is demanding credit. Over the long term, however, he expects a succession of about two dozen mini deals over the next 10 to 15 years. We don’t have the political dynamic in place to make one big deal that would solve the budget deficit problem, he said.