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.

Natixis Investment Managers Solutions Portfolio Strategists Jack Janasiewicz and Garrett Melson offer their take on the shifting macro storylines in the third quarter. Highlights include the acceleration in real growth while inflation is improving, progress on Fed Chair Powell’s checklist, the outlook for rates, and some perspective on student loan debt.
  • 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.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions are as of September 7, 2023, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.