There’s a saying in markets that being early is being wrong. Given that maxim, it’s fair to say that over the past two years pessimistic economists and market analysts have been wrong.

Bearish forecasters began to warn of a recession and corresponding stock-market selloff as early as April 2022. Take, for example, an October 2022 Reuters poll in which 65% of the economists it surveyed said a recession would arrive in the following 12 months. Things were supposed to get ugly, and soon.

Fast-forward to today and the sun is still shining on the US economy. Unemployment is below 4%, inflation is sliding, consumers are still spending, and the S&P 500 rallied as much as 20% this year before cooling off recently. And GDP is projected to grow by 1.6% in this third quarter, economists surveyed by the Philadelphia Fed said. Hardly recession material.

Optimistic, bullish economists are of course relishing the opportunity to say “I told you so,” as consensus starts to bend toward their view that the economy will achieve a soft landing — lower inflation without the need for an economic shock like a recession. Economists at Bank of America and JPMorgan now say a recession will not happen this year, or perhaps at all.

But just because the economy’s flight path seems gentle now doesn’t mean that there won’t be turbulence ahead. According to top Wall Street strategists and economists I’ve spoken with in recent weeks, there’s plenty of evidence that a recession is on the way. In other words, bulls are declaring victory far too early.

“To say today that we’re going to have a soft landing is so premature,” Michael Kantrowitz, the chief investment strategist at Piper Sandler, told me. “History tells you you really can’t make that assessment.”…Source – Read More!

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