For months now, the economic prophets have been saying a recession is coming. I'm not an economist, but I have been running a small home-based business for decades. I've been through good times and bad. My particular industry — journalism — is in trouble. But then, it's always been in trouble.
I keep looking ahead, and I don't see a recession coming.
What do I know that others don't? Not much, but when I look at the same inflation, unemployment, market numbers, and other economic data. I come away with an entirely different view. I don't understand why the "experts" don't see it either.
For instance, we all know that major tech companies are laying off tens of thousands of people. They're all clearly scared by the potential of recession.
Should they be? The overall stock market's top gainers are Apple, up 36%; Microsoft, up 37%; Alphabet, up 39%; and Amazon, up 44%. Even Netflix, perhaps the weakest of the FAANG stocks, hit a new 52-week high earlier this month.
Indeed, the overall stock market has been heading upward for months. The S&P 500 is up nearly 20% from its October lows. I don't do much with stocks — the companies I know best are the same ones I cover as a journalist, so I don't invest in them — but even I can tell this looks a heck of a lot more like a bull market than a bear one.
Did big tech really need to lay off so many workers? I don't think so.
Wait, what's this? According to the US Bureau of Labor Statistics (BLS), the total nonfarm payroll employment increased by 339,000 in May. The agency also reported there were 10.1 million job openings at the end of April, with 1.8 vacancies for every unemployed person.
I hear about this every day from my fellow small business owners. There's not one of them that's fully staffed. Is your business? I doubt it.
As for the overall economy, it keeps growing. No matter how much the Federal Reserve keeps pumping up interest rates, people keep buying stuff. True, they may not be buying as many houses with prices and interest rates continuing upward, but everything else seems to be moving off store shelves.
Inflation continues to be a pain. It's at 4.9% now. On the other hand, private-sector wages are up to 5.1%. It's not much of a win for workers, but it's a win.
It's not as if businesses have been hurting, even with the higher interest rates. The oil and gas energy companies, such as ExxonMobil, Shell, and Chevron, for example, are seeing record corporate profits. Oh, and the car companies? True, sales are down, but their profits were the best in six years.
If this is a recession, it sure doesn't look like any I've ever seen!
The immediate threats to the economy have calmed, including recent worries about the US debt ceiling. Those fears evaporated when the President and Congress came to an agreement on federal spending agreement.
Our worries about banking have also cooled. The fall of the Silicon Valley Bank and other major banks did not lead to a ‘30s-style banking or ‘80s-era savings and loan collapse.
True, Russia's invasion of Ukraine continues to rattle the world's nerves, but, short of a Russian nuclear attack or a major Ukrainian military disaster, the world economy seems stable. (And, if those happen, we'll have a lot more to worry about than a recession.)
I'm not the only one who now thinks we're not in much danger from a recession these days. Goldman Sachs lowered its expectations for a US recession back to 25%.
Other financial giants are still worried. Sameer Samana, Wells Fargo Investment Institute senior global market strategist, told CNN that investors should “avoid getting sucked into this as a new bull market. Keep perspective of what this is, which is a very tantalising bear market rally.”
A 20% rise isn't tantalising. It's a real bull rally.
Now, my company will never be in the stock market. And my business has its own specific woes — companies are now under the delusion that AI is ready for work — but you know what? I'm tired of worrying. When I look at the economy, I feel optimistic. So should you. And you plan for the year ahead with that in mind.