To be sure, several better-than-forecast data points don’t amount to an all-clear sign for the economy. American business is still reluctant to ramp up capital investment against a backdrop of trade policy uncertainty and tepid global demand.
The chances of recession in the next 12 months are up to 35% from 20% at the end of last year, according to a Bloomberg survey of economists earlier this month. Forecasters still project 2.2% GDP growth this year and 1.7% in 2020.
Recession concerns grew last month after President Donald Trump announced more tariffs on Chinese goods, prompting a retaliation, while the stock market slumped and a key part of the Treasury yield curve inverted -- a traditional harbinger of recession.
“People got overly pessimistic about the U.S. economic outlook,” said Mark Vitner, senior economist with Wells Fargo & Co. Now, he says, “the message is growth is slower, yes, but the risk of recession is grossly overstated. As long as the Fed continues to do the right thing” by cutting rates a couple more times.
“A year from now we’ll look back and say, yes, we pivoted to slower growth and job growth slowed, but there is still a lot going right with the economy,” he said.
This article was provided by Bloomberg News.