Despite predictions of an impending recession last year, the U.S. economy continues to show resilience.
Friday's better-than-expected jobs report was the latest sign. The U.S. economy added 353,000 jobs, well above the consensus estimate of 185,000.
Below, some of Wall Street's smartest equity strategists and economists have analyzed the charts that matter most to investors to help explain the economy's strength amid the highest interest rates in more than 20 years.
Editor's note: All charts were submitted before January 26th. All 33 charts from Yahoo Finance Chartbook can be found here..
Claudia Sahm, Founder of Sahm Consulting
“For the past two years, most forecasters have been saying that a recession is on the horizon. Some commentators, like former Treasury Secretary Larry Summers, have said that a recession is 'necessary' to reduce inflation. They were wrong.''My recession indicator, the so-called Therm Rule, showed that we were not in a recession and that a recession was unlikely to be on the horizon.
“Thermrule takes advantage of unemployment. [rate] To characterize the economy. Specifically, we use a three-month average of the unemployment rate to smooth out monthly fluctuations. The latest value for that series is then compared to the lowest value of the previous 12 months. If this is higher than 0.5 percentage points, we are in a recession. Since the 1970s, it has been completely accurate, never triggered outside of a recession, and always triggered at the beginning of each recession. In the past few years, the Sahm rule has not been invoked, nor has it been particularly close. ”
Mark Zandi, Chief Economist, Moody's Analytics
“What will be critical for the economy in 2024 will be whether consumers continue to do their part and maintain their spending.Therefore, inflation remains moderately below wage growth at all wage levels. This is encouraging. The combination of increased consumer purchasing power and low debt has increased consumer purchasing power.'' Rising service costs, rising net worth, and still ample excess savings among high-income households have pushed consumers to The economy and market will be able to endure this difficult situation and have another good year. ”
Neil Dutta, Head of Renaissance Macroeconomic Research
“The general bearish story is that U.S. consumers are ‘running out of gas.’ They are drawing down all their excess savings, and as a result, they no longer have a cushion of savings to spend.
“Consumption is supported by continued growth in real incomes. Real incomes are rising as consumer price growth slows and the labor market is strong. Since May, real incomes have been rising. 's real income is increasing.' [excluding] Transfers, a major determinant of economic downturns, are increasing at an annual rate of about 3%. In fact, personal savings rates are slightly higher than they were a year ago. Bottom line: Consumers are not “running out of gas.” ”
Binky Chadha, Chief Global Strategist, Deutsche Bank
“For more than a year, the consensus of economists has been adamant that U.S. growth calls for an imminent sharp slowdown. When that hasn't happened, the consensus of economists has repeatedly simply moved up the predicted timing of the slowdown. .”
Torsten Sløk, Chief Economist, Apollo Global Management
“The market story for 2023 was that U.S. growth expectations were first revised downwards and then upwards as financial conditions eased.” [the regional banking crisis] March. … We are starting to see the same pattern in 2024 due to the significant easing of financial conditions since November. …
“Japan and Europe have performed differently, with growth expectations stable in Japan and significantly revised downward in Europe. It took the market by surprise. This is unique to the US and we are starting to see the same pattern play out again in 2024.” (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
Gregory Daco, Chief Economist, EY Parthenon
“The resurgence of immigration in the United States plays a vital role in promoting population growth and labor force participation, contributing significantly to rebalancing the labor market. This influx of new workers is particularly important for There remains a continuing shortage of labor supply, which eases upward pressure on wages and adds to disinflationary pressures.
“This demographic shift promises to inject much-needed dynamism and diversity into the workforce and provide a more balanced and sustainable path for the economy.”
Ryan Detrick, Chief Market Strategist, Carson Group
“Our country hasn't seen high productivity in recent decades, but I think that's about to change.
“We have seen strong productivity numbers in the last two quarters, and with AI innovation and the familiarity of nearly 8 million employees at work over the past two years, we are poised to see significant productivity gains for years to come. I think there is potential for improvement.
“This is important because the Fed doesn't like wage increases, but if productivity is strong, wages can rise while inflation remains contained. Also, because inflation is no longer a big problem, the Fed will cut interest rates. We saw a similar scenario happen in the mid-'90s… Note that the mid-to-late '90s were a great time for our economy and for investors. .”
Linda Yue, Adjunct Professor of Economics, London Business School, Research Fellow in Economics, University of Oxford
“This chart is a key factor in interest rates this year, which, barring further shocks, appears to be a turning point in the business cycle. Central banks are concerned about inflation taking hold, the so-called second-order effect. .Overall inflation leads to inflationary increases in wages, costs, and expectations….
“This graph shows that wage growth is slowing, even though wages are still rising in the United States and major European countries. This is particularly important in this interest rate cycle because, despite the slowdown, the labor market is tight and unemployment is low.''Central banks therefore need to monitor the labor market to see if inflation is incorporated. We are monitoring developments. This graph…shows a slowdown in wages as price growth slows, strengthening the case for rate cuts in the US, UK and other countries from their current restrained stances. This year it's the euro zone. ”
Liz Everett Krisberg, Director, Bank of America Research Institute
“Throughout 2023, U.S. consumers showed resilience. Overall spending growth remained positive, albeit slowing from its peak, but spending among high-income households remained positive. Growth has lagged behind that of low- and middle-income households, which is explained by disparities in household wage growth. Bank of America internal data shows that wage growth for high-income households has lagged behind that of low- and middle-income households. This indicates that wage growth has lagged behind that of low- and middle-income households, and in fact, the wage growth rate of high-income households has turned negative (-0.1% year-on-year, 3-month moving average, [seasonally adjusted]) In December, the wage growth rate for low-income households improved to +2.5% year-on-year, suggesting that spending growth for high-income households will continue to lag. ”
Liv Wang, Lead Data Scientist, ADP Research Institute
“Salary growth has slowed for more than a year, according to ADP Pay Insights. ADP Pay Insights uses payroll transaction data to provide insights into wages and salaries from nearly 10 million matched employees over a 12-month period.・YoY wage change for workers who have worked for the same employer for 12 months or more fell to 5.4% in December 2023, the smallest since September 2021. The median annual wage change for those in the workforce fell to 8%, the lowest since June 2021.
“Wage growth has gradually declined from unsustainably high levels. We have surpassed the post-pandemic phase where wage increases for job-hoppers and leisure and hospitality workers reached double digits. The wage premium for job-hopping has narrowed. ing.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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