-
The US is heading towards the "promised land" of economic expansion, according to market veteran Ed Yardeni.
-
Yardeni highlighted four improving economic indicators that suggests an expansion is more likely than a recession.
-
"The permabears will have to postpone their imminent recession yet again," Yardeni said.
The US economy is headed towards the "promised land" of a rolling expansion rather than a recession, according to market veteran Ed Yardeni.
That thinking goes against what a lot of economists think, with many forecasting a recession caused by a slowdown in the consumer and an ever-tightening Federal Reserve.
But Yardeni highlighted in a Tuesday note four improving economic indicators that show that some pockets of the economy are looking a lot better than some bearish investors might think.
"The permabears will have to postpone their imminent recession yet again based on today's batch of US economic indicators, which suggests that our 'rolling recession' is turning into a 'rolling expansion," Yardeni said.
These are the four economic indicators that have got Yardeni so excited.
1. The housing market
Yardeni highlighted that the housing market is recovering nicely from its recession that was sparked by mortgage rates hitting 7% last year. Housing starts surged more than 20% last month while new home sales soared. That's a great sign for the economy.
"Builders are scrambling to build more inventory to satisfy pent-up demand. New home sales are reaching levels seen before the pandemic," Yardeni said.
2. The manufacturing sector
Recent business surveys from the Federal Reserve showed an increase in activity, while new orders for manufactured goods jumped 1.7% month-over-month in May and rose for the third month in a row.
One comment from the Dallas Fed Manufacturing Survey included an interesting comment from a company in the computer and electronic product sector that helps explain why the manufacturing sector isn't rolling into a recession.
"We intend to hire more people and embark on a significant capital improvement project so that we have capacity available as soon as the economy starts to recover after the recession that everyone is predicting," the comment said.
It's that kind of attitude, preparing for the end of the inevitable recession, that is helping the manufacturing sector.
"The average of the general business indexes of the regional business surveys conducted by five of the 12 Federal Reserve district banks jumped in June, suggesting that the manufacturing recession may be bottoming," Yardeni said.