Evidence for the Recent Drumbeat of Recessionary Warnings Has Not Materialized in U.S. Economic Numbers.
TPA has heard analyst’s calls for an upcoming recession grow stronger over the past 6 weeks. There are real concerns about disruptions. China has shut down a good part of its economy as Covid cases surge again. “Nearly 400 million people across 45 cities in China are under full or partial lockdown as part of China's strict zero-Covid policy. Together they represent 40%, or $7.2 trillion, of annual gross domestic product for the world's second-largest economy,” - CNN 4/17/22. The ongoing atrocities perpetrated by Ukraine on Russia are disrupting Energy flows into Europe and causing problems in the global financial system. These are worrisome situations globally, but evidence for the drumbeat of recession warnings has not materialized in U.S. economic numbers.
TPA provides the table and charts below for a look at the current economic situation in the U.S. with a historic perspective. The strength of the U.S. economy is very good whether one looks at the overall numbers (as measured by GDP or the Leading Economic Indicators), corporations (as measured by US corporate profits), or the consumer (as measured by employment, wages or debt).
The latest numbers show GDP at 5.5%, Unemployment at 3.8%, Non-Farm Payrolls at +750k, Leading Indicators at +7.51%, Average Hourly Wages at +5.2%, US Corporate Profits at +20.9%, Household Debt to Disposable Income at 98.5%, Household Debt to GDP at 74%, and Bank-Consumer charge-offs at 0.91%. These numbers are illustrated in the long-term charts below, which are annotated to show the current numbers relative to the past 50 years. The most recent results are 120%, 31%. 428%, 972%, 79%, 202%, 5.6%, 3.3%, and 64% better than the 10-year averages, respectively.
There are real threats for stocks, but the evidence shows that these are exogenous to the U.S. economy, which seems to be running at a very healthy pace.
Sources:
- Bloomberg data