Economic Outlook

[tsptalk]

"Markets will be ravaged by a recession next year, with the benchmark US stock index potentially falling 24% from its current level.."

Good timing for them with that article. I wonder if they're buying or selling right now?

 

[TommyIV]

The Chicago Business Barometer is validating the bears:

"..the Chicago PMI, dropped to 37.2 in October from its previous reading of 45.2. Anything below 50 represents a contraction in activity and any reading below 40 has coincided with a recession going back half a century. There has only been one recession out of the last eight—a mild one in the early 1990s—that wasn’t preceded by a sub-40 reading, and it was close to that level."

They don't mention if there were times when the indicator fell below 40 and a recession didn't follow. I think that might be a more deductive argument made.

Another Traditional Recession Indicator is Flashing a Warning Sign

 

[tsptalk]

Right now the headlines are bouncing back and forth between inflation and recession concerns. That makes the Fed's job tough, although they seem to be leaning more towards fixing inflation with a recession.

 

[TommyIV]

Walls Fargo is taking their turn to project 2023. They're using the word modest.

Wells Fargo sees the U.S. economy slipping into a "modest" recession beginning in mid-2023 and expects it to end the year with annual growth of 0.2%, much slower than a 2% rise estimated for 2022.

They think the Fed is on track. They expect inflation to fall below 4% by the end of next year. The last CPI was 7.7% y-o-y.

The headline tells you what they think about the global economy in 2023.

Wells Fargo sees global growth slowing to 1.7% next year

 

[tsptalk]

I don't think the market has fully priced this in yet -- a GDP of near 0% for 2023. Earnings estimates have not been lowered enough so P/E's need to come down quite a bit and that means stocks prices also need to reflect this.

 

[TommyIV]

A not-so-gloomy outlook on 2023. Goldman Sachs has a different outlook than most on what to expect in 2023. The economist at Goldman Sachs have faith in the Federal Open Market Committee can increase borrowing costs at a rate to successfully pull off a soft-landing and avoid a recession in 2023. The is change in consensus among most economists who are busy arguing about how deep and how long 2023's imminent recession will be.


Goldman Sachs believes U.S. will avoid recession, progress toward a soft landing