{"id":36463,"date":"2022-06-04T14:08:59","date_gmt":"2022-06-04T14:08:59","guid":{"rendered":"https:\/\/harchi90.com\/a-us-recession-wont-happen-as-consumer-too-strong-strategist-says\/"},"modified":"2022-06-04T14:08:59","modified_gmt":"2022-06-04T14:08:59","slug":"a-us-recession-wont-happen-as-consumer-too-strong-strategist-says","status":"publish","type":"post","link":"https:\/\/harchi90.com\/a-us-recession-wont-happen-as-consumer-too-strong-strategist-says\/","title":{"rendered":"A US Recession Won&#8217;t Happen, As Consumer Too Strong, Strategist Says"},"content":{"rendered":"<div>\n<ul class=\"summary-list\">\n<li>The dreaded &#8216;R&#8217; word is on everybody&#8217;s lips, with more and more Wall Street analysts predicting a US recession.<\/li>\n<li>But Mike Skordeles of Truist said the consumer is strong and inflation will cool, and that supports the economy.<\/li>\n<li>He told Insider the economy is likely headed for a rockier patch, but says recession fears are overblown.<\/li>\n<\/ul>\n<div class=\"inline-newsletter-signup &#10;                        headline-regular loading\" id=\"formContainer\" data-component-type=\"inline-newsletter-module\" data-event-label=\"10_things_markets\" data-list=\"10 Things Before the Opening Bell\" data-acq-source=\"marketsverticalinline\">\n<section class=\"inline-newsletter-content\">\n<div class=\"js-loader hidden\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"svg-icon \" version=\"1.1\" role=\"img\" width=\"50\" height=\"50\" viewbox=\"0 0 50 50\" style=\"enable-background:new 0 0 50 50;\" xml:space=\"preserve\">\n                        <title>Loading<\/title>\n                        <desc>Something is loading.<\/desc>\n                        <path fill=\"#111\" d=\"M43.935,25.145c0-10.318-8.364-18.683-18.683-18.683c-10.318,0-18.683,8.365-18.683,18.683h4.068c0-8.071,6.543-14.615,14.615-14.615c8.072,0,14.615,6.543,14.615,14.615H43.935z\">\n                          <animatetransform attributetype=\"xml\" attributename=\"transform\" type=\"rotate\" from=\"0 25 25\" to=\"360 25 25\" dur=\"0.6s\" repeatcount=\"indefinite\"\/>\n                        <\/path>\n                      <\/svg><\/div>\n<\/section><\/div>\n<p>At the end of last year, almost nobody was talking about a US <\/p>\n<p>                        <span class=\"component rich-tooltip reference-autolinker no-help\" data-component-type=\"reference-autolinker\"><br \/>\n                          recession<br \/>\n                          <span style=\"font-size: 0px;\"\/><br \/>\n                        <\/span>.  Now, the dreaded &#8216;R&#8217; word is on everybody&#8217;s lips.<\/p>\n<p>A consensus is building on Wall Street that US economic growth is soon likely to turn negative, as the <\/p>\n<p>                        <span class=\"component rich-tooltip reference-autolinker no-help\" data-component-type=\"reference-autolinker\"><br \/>\n                          Federal Reserve<br \/>\n                          <span style=\"font-size: 0px;\"\/><br \/>\n                        <\/span>  hikes interest rates to cool rampant inflation.<\/p>\n<p>Russia&#8217;s invasion of Ukraine has sent energy prices soaring, adding to inflation and making the Fed&#8217;s job even harder.  China&#8217;s zero-COVID policy &#8211; which has shut down swathes of its economy &#8211; isn&#8217;t helping.<\/p>\n<p>Traditionally, a recession is defined as two quarters of decline in gross domestic product.  Needless to say, it&#8217;s not good for companies or their stock prices.  The S&#038;P 500 has tumbled this year, partly due to worries about growth.<\/p>\n<p>But for all the doom and gloom, there are plenty who doubt the recession narrative, and say the US economy is still strong.<\/p>\n<p>Michael Skordeles &#8211; a senior US macro strategist at Truist Advisory Services, part of the $ 66 billion bank &#8211; is one of those people.<\/p>\n<p>&#8220;It&#8217;s the consumer, stupid,&#8221; he told Insider this week, paraphrasing James Carville&#8217;s famous saying.<\/p>\n<p>&#8220;We&#8217;re not saying risks haven&#8217;t increased,&#8221; he said.  &#8220;All the conditions were very favorable, and now they&#8217;ve gotten less favorable than that. But that doesn&#8217;t mean it&#8217;s a recession.&#8221;<\/p>\n<p>Skordeles said Americans are sitting on a lot of cash, thanks in large part to pandemic stimulus.  Truist estimates consumers have built up $ 4.7 trillion in savings and deposits since the start of the coronavirus outbreak.<\/p>\n<p>But Skordeles said $ 1.2 trillion of that has come since May 2021, when stimulus measures had mostly ended, largely as a resulto of a rise in wages.<\/p>\n<p>Skordeles said the strong labor market &#8211; unemployment stood at 3.6% in April, near the lowest level since the 1950s &#8211; is helping people&#8217;s wages and incomes grow.  And although that is inflationary, it also means spending is likely to hold up.<\/p>\n<p>Yet the Truist strategist said there&#8217;s good news on inflation, too.  A surge in spending on goods during the pandemic stressed out supply chains and contributed to soaring prices.<\/p>\n<p>However, there&#8217;s now evidence of a rotation back to spending on services, such as as life gradually returns to normal after the pandemic.  Skordeles said that should help alleviate inflationary pressures.<\/p>\n<p>Retail trade sales grew 6.7% in April compared to a year earlier, but spending on food services, such as restaurants, and drinking places shot up 19.8%.<\/p>\n<p style=\"text-align: center;\"><strong>Spending on services has been picking up<\/strong><\/p>\n<figure class=\"figure image-figure-image  \" data-type=\"img\" data-e2e-name=\"image-figure-image\" data-media-container=\"image\">\n<div class=\"lazy-holder \" style=\"padding-top: calc(100% * 373 \/ 832)\">\n<p>                          <img class=\"lazy-image \" viewbox=\"0 0 1 1\" data-content-type=\"image\/png\" srcs=\"{&quot;https:\/\/i.insider.com\/629767383efa8c0019aa6e79&quot;:{&quot;contentType&quot;:&quot;image\/png&quot;,&quot;aspectRatioW&quot;:832,&quot;aspectRatioH&quot;:373}}\" alt=\"Consumer spending charts - Truist\"\/><\/p>\n<p>                          <noscript><br \/>\n                              <br \/>\n                          <\/noscript><\/p><\/div>\n<p>                          <span class=\"image-source-caption \"><figcaption class=\"image-caption headline-bold\" data-e2e-name=\"image-caption\">\n<p>                              Spending on goods has helped push up inflation, but there are signs consumers are rotating back to services.<br \/>\n                            <\/figcaption><span class=\"image-source headline-regular\" data-e2e-name=\"image-source\"><\/p>\n<p>                                Truist<br \/>\n                              <\/span><br \/>\n                          <\/span><br \/>\n                      <\/figure>\n<p>At the heart of most economists &#8216;predictions for a recession is the Fed. In many analysts&#8217; eyes, the central bank will have to hike interest rates so high to choke off inflation that it will derail the economy.<\/p>\n<p>Yet Skordeles said the recent slowdown in growth seen in the US and elsewhere &#8211; due to rising energy costs and uncertainty, among other things &#8211; could actually be a good thing for the economy overall, in the medium term.  Combined with the shift to services spending, it&#8217;s likely to mean the Fed hikes less hard than many expect.<\/p>\n<p>&#8220;It&#8217;s gonna be uneven. It&#8217;s not gonna be a straight line. We expect continued <\/p>\n<p>                        <span class=\"component rich-tooltip reference-autolinker no-help\" data-component-type=\"reference-autolinker\"><br \/>\n                          volatility<br \/>\n                          <span style=\"font-size: 0px;\"\/><br \/>\n                        <\/span>&#8220;Skordeles said.&#8221; But I think we get past it. &#8220;<\/p>\n<p><em><strong>Read more: <\/strong>Deutsche Bank&#8217;s chief strategist says stocks could surge another 15% by the end of 2022, building on their recent strength.  Here&#8217;s why he&#8217;s bullish even if a recession starts soon.<\/em><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The dreaded &#8216;R&#8217; word is on everybody&#8217;s lips, with more and more Wall Street analysts predicting a US recession. But Mike Skordeles of Truist said the consumer is strong and inflation will cool, and that supports the economy. He told Insider the economy is likely headed for a rockier patch, but says recession fears are &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/harchi90.com\/a-us-recession-wont-happen-as-consumer-too-strong-strategist-says\/\"> <span class=\"screen-reader-text\">A US Recession Won&#8217;t Happen, As Consumer Too Strong, Strategist Says<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[8],"tags":[],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/i.insider.com\/629769253664880018d0fb7e?width=1200&format=jpeg","_links":{"self":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/36463"}],"collection":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/comments?post=36463"}],"version-history":[{"count":0,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/36463\/revisions"}],"wp:attachment":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/media?parent=36463"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/categories?post=36463"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/tags?post=36463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}