Wall Street is panicking about a recession. But consumer spending and cooling inflation means it's not going to happen, a US strategist argues.

Most people were not talking about a US recession at the end of last year. Everyone has the 'R' word on their lips.

A consensus is building on Wall Street that the US economy is going to turn negative as the Federal Reserve hikes interest rates.

Adding to inflation is the fact that energy prices have gone up as a result of Russia's invasion of Ukraine. China's zero-COVID policy is not helping.

A recession is defined as two quarters of decline in GDP. It isn't good for companies or their stock prices. Concerns about growth have caused the S&P 500 to fall.

There are a lot of people who think the US economy is still strong.

One of them is a senior US macro strategist at Truist Advisory Services.

He told Insider that it was the consumer who was stupid.

He said risks have not increased. The conditions were very favorable, but now they're less favorable than that. That does not mean that it is a recession.

Skordeles said Americans are sitting on a lot of cash because of the swine flu. Consumers have built up $4.7 trillion in savings and deposits since the beginning of the coronaviruses outbreak, according to Truist.

Skordeles said that there has been a rise in wages, which has led to a rise in the amount of money.

The unemployment rate stood at 3.6% in April, near the lowest level since the 1950s, helping people's wages and incomes. Spending is likely to hold up even though it's inflationary.

The Truist strategist said there was good news on inflation. Supply chains were stressed out due to a surge in spending on goods during the Pandemic.

Life begins to return to normal after the Pandemic after a rotation back to spending on services. It should help alleviate inflationary pressures.

Spending on food services increased by 19.8% in April compared to a year earlier.

Spending on services has increased.

Truist

The Fed is the most important factor in predicting a recession. The central bank will have to raise interest rates so high that it will cause the economy to fall off a cliff.

Skordeles said that the recent slowdown in growth in the US and elsewhere could be a good thing for the economy in the long run. The shift to services spending will make the Fed hikes less difficult.

It's going to be a little different. The line is not going to be straight. Skordeles expects continued volatility. We get past it.

The chief strategist atDeutsche Bank thinks that the stock market could surge another 15% by the end of the year. Even if a recession begins soon, he's still bullish.