We try to construct these weekly pieces as narrative or mini-narrative essays. This week we are taking a different approach, simply listing the reasons why we think a US recession isn’t pre-ordained. Before we get to those reasons, we would point out that since 1980, the US economy has been in recession just 13% of the time, and that the yield on the US 10 Year Note has come in by about 40bps, a possible sign the market is increasingly confident the Fed will win the battle against inflation (see chart).
- Corporate America, the US consumer is in fantastic financial shape
- Companies hold $7 trillion in cash; excess household savings total $2 trillion
- The labor market is exceptionally strong – sub 4% unemployment rate
- Home prices are at an all-time high; record tappable equity
- Some inflation data points appear to have peaked/have rolled over
- No signs of meaningful sector or industry imbalance
- Credit conditions aren’t overly tight
- Recession call seems the consensus on Wall Street
The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital Investments, LLC, a registered investment advisor. 1120-BCI-6/27/2022