{"id":36641,"date":"2022-06-04T17:34:00","date_gmt":"2022-06-04T17:34:00","guid":{"rendered":"https:\/\/harchi90.com\/wall-street-is-panicking-about-a-recession-but-consumer-spending-and-cooling-inflation-means-its-not-going-to-happen-a-us-strategist-argues\/"},"modified":"2022-06-04T17:34:00","modified_gmt":"2022-06-04T17:34:00","slug":"wall-street-is-panicking-about-a-recession-but-consumer-spending-and-cooling-inflation-means-its-not-going-to-happen-a-us-strategist-argues","status":"publish","type":"post","link":"https:\/\/harchi90.com\/wall-street-is-panicking-about-a-recession-but-consumer-spending-and-cooling-inflation-means-its-not-going-to-happen-a-us-strategist-argues\/","title":{"rendered":"Wall Street is panicking about a recession.  But consumer spending and cooling inflation means it&#8217;s not going to happen, a US strategist argues."},"content":{"rendered":"<div>\n<figure class=\"caas-figure\">\n<div style=\"\">\n<div>\n<div class=\"caas-img-container noheight\"><\/div>\n<\/div>\n<\/div>\n<p><figcaption class=\"caption-collapse\">Americans still have plenty of money to spend, Truist has said.<span class=\"copyright\">MediaNews Group \/ Orange County Register via Getty Images<\/span><\/figcaption><\/p>\n<\/figure>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>The dreaded &#8216;R&#8217; word is on everybody&#8217;s lips, with more and more Wall Street analysts predicting a US recession.<\/p>\n<\/li>\n<li>\n<p>But Mike Skordeles of Truist said the consumer is strong and inflation will cool, and that supports the economy.<\/p>\n<\/li>\n<li>\n<p>He told Insider the economy is likely headed for a rockier patch, but says recession fears are overblown.<\/p>\n<\/li>\n<\/ul>\n<p>At the end of last year, almost nobody was talking about a US recession.  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 Federal Reserve 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><button class=\"link caas-button collapse-button\" aria-label=\"\" title=\"\" data-ylk=\"elm:readmore;slk:Story continues\">Story continues<\/button><\/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><strong>Spending on services has been picking up<\/strong><\/p>\n<figure class=\"caas-figure\">\n<div style=\"\">\n<div>\n<div class=\"caas-img-container caas-img-loader noheight\"><img class=\"caas-img caas-lazy has-preview\" alt=\"Consumer spending charts - Truist\" src=\"https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/2TonIuoh2j99bp3dX6MV3g--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA--\/https:\/\/s.yimg.com\/uu\/api\/res\/1.2\/8TaLDfzn0uOVTW9AXicruw--~B\/aD0wO3c9MDthcHBpZD15dGFjaHlvbg--\/https:\/\/media.zenfs.com\/en\/business_insider_articles_888\/4d85efa8bdbeaa7b43caf76b11a0db05\"\/><noscript><img alt=\"Consumer spending charts - Truist\" src=\"https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/2TonIuoh2j99bp3dX6MV3g--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MA--\/https:\/\/s.yimg.com\/uu\/api\/res\/1.2\/8TaLDfzn0uOVTW9AXicruw--~B\/aD0wO3c9MDthcHBpZD15dGFjaHlvbg--\/https:\/\/media.zenfs.com\/en\/business_insider_articles_888\/4d85efa8bdbeaa7b43caf76b11a0db05\" class=\"caas-img\"\/><\/noscript><\/div>\n<\/div>\n<\/div>\n<p><figcaption class=\"caption-collapse\">Spending on goods has helped push up inflation, but there are signs consumers are rotating back to services.<span class=\"copyright\">Truist<\/span><\/figcaption><\/p>\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 volatility,&#8221; Skordeles said.  &#8220;But I think we get past it.&#8221;<\/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>Read the original article on Business Insider<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Americans still have plenty of money to spend, Truist has said.MediaNews Group \/ Orange County Register via Getty Images 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 &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/harchi90.com\/wall-street-is-panicking-about-a-recession-but-consumer-spending-and-cooling-inflation-means-its-not-going-to-happen-a-us-strategist-argues\/\"> <span class=\"screen-reader-text\">Wall Street is panicking about a recession.  But consumer spending and cooling inflation means it&#8217;s not going to happen, a US strategist argues.<\/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:\/\/s.yimg.com\/ny\/api\/res\/1.2\/aeCmUL8uhiGSrBCVgUzytw--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD05MDA-\/https:\/\/s.yimg.com\/uu\/api\/res\/1.2\/9kgHRKpQAeAcLVozc.sbsA--~B\/aD01MDA5O3c9NjY3OTthcHBpZD15dGFjaHlvbg--\/https:\/\/media.zenfs.com\/en\/business_insider_articles_888\/17baa17d73e31824d842fd3cbbc1dd21","_links":{"self":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/36641"}],"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=36641"}],"version-history":[{"count":0,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/36641\/revisions"}],"wp:attachment":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/media?parent=36641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/categories?post=36641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/tags?post=36641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}