The stunning strength of the US economy means the soft landing may already be here, Evercore founder says
- The US economy may have already stuck the soft landing, according to Evercore founder Roger Altman.
- The investing veteran pointed to resilient growth, which has crushed expectations over the last year.
The US economy may have successfully avoided a recession and is already gliding toward a soft landing, according to Evercore founder Roger Altman.
The investment banking chief pointed to rising fear of an economic downturn, especially as interest rates in the economy look poised to remain higher for longer.
But the US economy has been "amazing" in its resilience, Altman told CNBC on Thursday. Growth has surpassed economists' expectations, with real GDP expected to have surged 2.4% over the first quarter, according to the Atlanta Fed.
The job market also looks to be on rock-solid footing despite firms battling tighter financial conditions. The unemployment rate was at a record low of 3.8% in March—around a full percentage point lower than what the Fed previously predicted, Altman said. Labor productivity also remains strong, rising 2.6% year-over-year in the fourth quarter, according to the Bureau of Labor Statistics.
Those are big reasons stocks remain buoyant despite a sell-off this week as markets repriced expectations for Fed rate cuts. Inflation came in hotter than expected for the third month in a row in March, which led most investors to take the prospect of a June rate cut off the table.
"Everything by and large is going right in the US economy," Altman said, noting that inflation is usually sticky as it falls from a peak. "The economy is outpacing every single forecast one could have put up from six months ago or nine months ago. Arguably, the soft landing already has happened."
Some Wall Street bears have warned a recession still looms for the US economy, with signs of weakness beginning to surface in the job market. According to top economist David Rosenberg, 22 US states have met the criteria for the Sahm Rule, a notoriously accurate recession indicator that's triggered when the three-month moving average of the unemployment rate rises 50 basis points above its 12-month low.
The New York Fed is pricing in a 58% chance the US could tip into recession by March of next year. Most experts also saw a recession as unlikely at the start of the year, with 91% of economists assigning a less-than-50% chance of a recession in January, according to the National Association for Business Economics' latest survey.