Macro Insights: About That Recession…
Portfolio strategists analyze macro storylines in the third quarter including growth, inflation, the strength of the US consumer, and the outlook for rates.
- The much-feared recession has failed to materialize so far, as the economy and growth have been more resilient than expected.
- Many of the headwinds from 2022 turned to tailwinds this year as the economy continues to normalize after the pandemic.
- Capital expenditures and cost cutting are improving productivity and pandemic bottlenecks are fading away.
- US consumers are still spending, housing and manufacturing are stabilizing, and auto production has fully recovered to pre-pandemic levels.
- Core goods prices are actually in deflation, and if inflation gets closer to the Fed’s 2% target, rate cuts could be possible next year.
- The resumption of student loan payments has raised concerns about continued consumer strength, but any effects are likely to be marginal.
- Student debt payments represent less than 0.5% of overall US consumer spending – not enough to tip the US economy into recession.
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