Chances of Downturn ‘Vanishingly Low,’ Wells Fargo Says


The US is likely to avoid slipping into a recession, according to Wells Fargo head macro strategist Michael Schumacher.

“The big question is: what’s the chance of a really nasty landing? So maybe growth tips a little below zero, does it go deeply negative?” he said in a CNBC interview on Tuesday. “We at Wells Fargo think that chance is vanishingly low at this point.”

If any, the factor most likely to spoil that view and knock the economy off its feet right now is the labor market, Schumacher said. 

But the job market has shown signs of strength lately, with new job additions in January coming in well above estimates, and unemployment staying near historically low levels. However, Schumacher said a sudden shift could threaten the US’s chances of dodging a downturn.

“Labor markets are fickle and they can go from robust to really weak to unpleasant in the span of three to six months,” he said.

Schumacher continued: “The underlying economy is pretty good, but it’s not hot enough yet to spook the Feds. So [it’s] a good comfort zone for a lot of people.”

Still, not all economists are so optimistic. In a research note on Tuesday, David Rosenberg highlighted five inidicators that suggest the economy is not as strong as many think.


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