May 8, 2025
By Peter Bower
The Bull is going out on a limb and predicting that the U.S. will not have a recession this year. Many pundits have pronounced that one is likely this year. However, many of these same prognosticators had predicted one for several years after the pandemic to no avail, and now they’re back. Some of us in the investment business refer to these individuals as permabears – always looking for what’s wrong.
Current conditions are good. Take out the pull forward on imports this past quarter, and our economy is growing nicely. There is plenty of money around, and the AI opportunity is driving incremental investments throughout our country. Inflation is still a risk, but take away housing, and the numbers are tame. Housing prices are now rolling over in many parts of our country, so this source of inflation may be retreating.
Some goods, because of tariffs, may cost more, but remember that total imports are only about 12 percent of our economy. This can be handled. In many cases, higher prices destroy demand, so there are limits as to how much more the market will bear. Some companies are already finding that their prices are at that limit.
Lower regulations and tax cuts are coming. The job market is holding up. Much of the rest of the world is doing just fine. Don’t sell American business short on ingenuity and adaptability to deal with the challenges of today.
Surely there will be losers, but also many winners. This has been a “have and have not” economy for some time now. Pointing out losers doesn’t add any insight as to the overall condition. Our stock market is still likely to have bouts of volatility, but remember, volatility works both ways -up as well as down. Calling for a recession at this point seems more of an emotional response than a clear reading of the evidence. Stay steady my friends; this period will pass.
-The Lonely Bull
