Stock market bull Tom Lee said he doesn’t expect a recession, but investors might experience the same financial pain as if there was one.
"Corrections and bear markets have the same feel, which is buying doesn't feel right. Selling feels good," he told
CNBC.
"The market have been terrible. But that doesn't mean this is how markets are going to behave two [or] three months from now," he said. "There are lots of reasons to expect markets to start to perform better," he said.
Lee also doesn't see many other signs of an extended economic downturn.
"One of the messages from earnings this season has been, companies don't see the same type of destruction that markets are feeling," Lee said, though he conceded that "investors are doubting what companies are saying."
Other experts aren’t as optimistic.
The United States economy very well could plunge into recession this year if a series of factors continue along their present path.
“So the story of a 2016 United States recession is this: Tumult in emerging markets and the commodities sectors creates both real and psychological hits to an economy that is already growing sluggishly,” writes New York Times columnist
Neil Irwin.
And don’t look to the Federal Reserve to help, he warns. Central bank “policy makers lack either the tools or the will, depending on your view, to take action to contain the damage,” he warns.
“And so what should be relatively small hits to the economy are enough to suck the United States into a contraction,” he says. “If you like, add the possibility that there is a major unforeseen shock out there that makes all of this worse,” he said.
“But this much is clear: When an economy is already vulnerable, as the United States looks to be in 2016, it takes less to tip it over the edge than when it is strong,” he said.
Meanwhile, the biggest rise in U.S. labor costs in eight years is squeezing company profits and heightening fears of a recession.
Expenses per worker — so called unit labor costs — increased 2.4 percent last year, the most since 2007, after a 2 percent gain in 2014, according to data released Thursday by the Labor Department.
The rising wage bill is taking a bite out of companies’ bottom lines and prompting concern among some economists that firms will slash spending and hiring in response.
Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, highlighted to
Bloomberg the danger of a "huge squeeze on earnings" in saying that he had recently raised his odds of a recession in 2016 to 30 percent to 35 percent, from around 25 percent six weeks ago and 20 percent three to four months back.
(Newsmax wire services contributed to this report).
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