The U.S. economy may not experience a “soft landing” after all. A soft landing occurs when economic growth slows enough to keep inflation below the Federal Reserve’s 2% goal without sending the economy into recession. Many on the street expect this to happen as central banks start lowering interest rates. BNY Wealth’s Alicia Levin takes a more optimistic view. She believes the economy continues to expand without slowing down, and we are experiencing a no-landscape scenario. The company’s head of investment strategy and equities said, “So far, it’s clear that bank profits have exceeded expectations, both in terms of sales and bottom line. Net interest income has also exceeded expectations. It’s a good sign for us.” Tuesday’s “Squawk Box” on CNBC. “The other thing it shows is that [is] Her comments came after banks including Wells Fargo and JPMorgan Chase & Co. reported a number of better-than-expected results last week. Meanwhile, Bank of America reported strong financial results. On Tuesday, Levine set a year-end S&P 500 target of 5,900, but noted that real gross domestic product growth in the third quarter was “very close” to 3% for the second consecutive quarter. The economy grew at an annualized rate of 2.8% in the second quarter, with real GDP growth at 3%. “That’s not the goal,” she continued. “The goal was always to be above 2%.” Bank profits are not the only indicators of solid economic growth. Overall U.S. corporate profits are at a record high, about 60% higher than their pre-pandemic levels, according to data from MRB Partners. “Strong U.S. corporate sector finances indicate continued levels of employment and capital spending,” Peter Perkins, the firm’s global strategy partner, said in a note Tuesday. To be sure, there could be headwinds for the economy and the stock market, especially if inflation continues and the Fed is unable to cut interest rates as much as investors expect.
Why a ‘no landing’ scenario may take place after all
