From Barron's, July 19:
BCA Research expects a recession to start late this year or early in 2025 as consumer savings dry up and higher interest rates weigh on capital spending. Plus, market newsletter commentary on the stock market rotation, the housing outlook, and JD Vance’s view of tech.
This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron's.
Prepare for Recession
Daily Insights
BCA Research
July 19: BCA Research has been writing extensively about how consumption fueled by excess savings has been propping up the U.S. economy and prevented a recession in 2023. Now, many estimates of pandemic-era excess savings show that they have run out. While consumption is still robust, with June retail sales easily surpassing expectations, its tailwind is likely to wane.The Atlanta Fed’s GDPNow model corroborates the view that consumption growth will fade slightly. In April, just before the release of first-quarter data, the model estimated that consumption would contribute 220 basis points [2.2 percentage points] to real gross domestic product, much higher than the final print of 98 basis points, yet still the greatest contributor to growth.
Today, it expects consumption to contribute 150 basis points to real GDP growth. Interestingly, the model has been increasing the estimated contribution of investment to GDP growth and anticipates that investment will contribute 155 basis points to growth in the second quarter at a time when capital-expenditures intentions are muted and durable goods orders are slumping. The capex estimate is propped up by anticipated inventory restocking, however. Inventory changes should net to zero in the long run and aren’t a component of real domestic demand, the best growth barometer within GDP.
It is becoming increasingly evident that consumers are losing vigor. In addition, relatively tight monetary policy will eventually weigh on capex. Thus, the two private-sector domestic drivers of U.S. activity are likely to slow. We continue to expect a recession to begin in the U.S. in late 2024/early 2025.
Roukaya Ibrahim
‘Encouraging’ Stock Selloff
Paulsen Perspectives
paulsenperspectives@substack.com
July 19: The stock market has been declining in recent days, but in a very encouraging manner....
....MUCH MORE including thoughts from Regions Financial and BTIG