Despite the Forthcoming Recession in the US, Investors Look at the Bright Side

Image by Gerd Altmann from Pixabay

The unemployment rate in the US during the first months of the COVID pandemic was far from being all fine and dandy. During the third quarter of 2020, the unemployment rate in the US fell to 8.8 percent. As for the fourth quarter of the same year, that rate decreased to 6.7 percent.

During the fourth quarter of 2020, roughly 10.8 million people didn’t have a job in the US. As for the near future of the economy in the country, it doesn’t look too bright.

Recession is imminent in the US

Wall Street has been warning about a looming recession in the US for a while, but the country’s economy has been surprisingly strong. The unemployment rate remains relatively low, GDP growth continues, and the stock market has rebounded after a tough 2022.

However, Darrel Cronk, who is the president of Wells Fargo Investment Institute, is also one of those experts who believe that a recession is on the horizon. brings us details. Cronk points to the manufacturing sector’s decline and decreasing leading economic indicators as evidence. While the labor market and services sector has held up well, Cronk is concerned about the overall situation of the economy.

Sameer Samana explained as Yahoo Finance quotes:

We’re going to be in a highly volatile, higher inflation, elevated rate environment where the Fed may or may not be done [with interest rate hikes] and there’s a healthy dose of uncertainty to go alongside it. You probably don’t want to pay earnings multiples that are all that high in that environment,

I don’t think that we’re going to take off to the upside.

Sameer Samana, Wells Fargo Institute’s senior equity strategist, agrees with Cronk and claims that investors are too optimistic. Despite inflation, predicted interest rate hikes, as well as falling corporate profits, investors choose to pay high prices for stocks. Samana warns of a potential earnings recession, where corporate revenues are falling faster than labor costs.

Sawyer Alim
Sawyer is our team's tech specialist. He's constantly looking for new technologies to try them out and later present to our readers. Sawyer is just getting his start as a journalist, but has over 5 years experience at a tech company.