Apollo's Chief Economist: The US economy is experiencing a "soft landing" with no signs of a recession
Apollo's Chief Economist Torsten Slok pointed out that the US economy is heading towards a soft landing with no signs of a recession. Analyzing recent employment data, he found that the unemployment rate dropped from 4.3% to 4.2%, despite the slight decrease in the number of employed individuals. Wage growth accelerated to 3.8%, surpassing pre-pandemic levels. Consumer spending remains robust, and corporate profits are at historical highs, with the third-quarter economic growth rate expected to be 2.1%. Slok stated that these signs indicate that the economy is not heading into a recession
According to Torsten Slok, Chief Economist at Apollo, the US economy is heading towards a soft landing with no signs of a recession.
Slok analyzed recent employment data in a report last weekend and found no signs indicating an imminent economic downturn. Instead, there are many signs pointing towards sustained robust growth for some time. He stated, "The US economy is not in a recession, and there are no signs of an impending recession."
Some encouraging data points mentioned by Slok include the August non-farm payroll report, which showed the unemployment rate dropping from 4.3% to 4.2%. Despite employment numbers slightly below economists' expectations of 164,000, with an increase of only 142,000, Slok remarked, "It's hard to see clear signs of slowing job growth."
Furthermore, regarding wage growth, wages continue to outpace inflation and seem to be staying at a level higher than the slow growth before the pandemic. This is a positive development. Wage growth accelerated to 3.8% in August, well above pre-pandemic levels (below 3%).
With total non-farm employment in the US at a historical high of 160 million, consumers are feeling confident in their spending habits. This is crucial as consumer spending accounts for about 70% of the US economy.
"Daily data on debit card transactions shows that consumer spending has been accelerating in recent weeks," Slok said. "Weekly retail sales data from last week showed an increase and remained solid."
Lastly, there seems to be little unemployment or layoffs in the economy relative to other indicators.
Initial jobless claims and continued claims for unemployment benefits have both declined in recent weeks, and bankruptcy filings have dropped significantly since the beginning of the year.
Most importantly, corporate profits are at historical highs, and the GDP model of the Atlanta Fed indicates a third-quarter economic growth rate of 2.1%, following the 3.0% GDP growth rate in the second quarter. According to Slok, this is not a phenomenon that occurs just before an economic recession. Slok stated:
"All signs point to this being a soft landing."