Despite the stock market taking a hit in recent months from growing recession fears, some experts still remain cautiously optimistic about the economy.
The US economy contracted by 1.4% in the first quarter of 2022, but the economic outlook isn't as bad as it seems.
A majority of forecasters think GDP will grow between 2% and 3% in the current quarter, which is a good rebound from the previous quarter.
Many experts are warning that the economy is heading for a hard landing as the Fed tries to combat inflation, but the economy is simply slowing rather than shrinking, argues Jeffrey Roach, who forecasts full-year GDP growth of 2.6%.
He says the economy has enough strength to offset inflationary pressures thanks to a stable U.S. consumer.
Mark Hackett, Nationwide's chief of investment research, says that the market bottoming process is messy and volatile and that negative sentiment is being overblown.
Sam Stovall, chief investment strategist for CFRA Research, told Forbes that the ideal scenario would be a soft landing, where the Fed is able to tame inflation without hurting economic growth.
After contracting in 2020, the U.S. economy grew in 2021. Since then, stocks have had one of their worst starts to a year on record as rising interest rates, surging inflation and the Russia-Ukraine conflict hurt investor confidence. The S&P 500 lost 1% last week, its eighth negative week out of the last ten, while the DOW fell 1%, its ninth down week out of the last ten. Despite encouraging manufacturing and jobs data last week, investors sold shares on the news, with good news being treated as bad news because of the Fed implications. The shift in investor behavior from a 'buy the dip' mentality to a'sell the rally' approach this year is complicated.
State Street Global Advisors chief investment strategist Michael Arone wrote that the threat of a global recession has raised serious concerns about the future of corporate profits. Corporate profits could be put under downward pressure due to the global supply shocks.
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