A U.S. Recession Is Unlikely

The annualized 2.9% contraction in first quarter U.S. GDP was among the worst of the postwar era and the only one of its size that did not occur during a recession. But coincident and leading indicators suggest that a recession is highly unlikely.

A US Recession Is Unlikely

From the coincident perspective, the pickup in the pace of hiring, modest as it has been, contrasts with the deceleration of payroll gains that have regularly preceded recessions. Year-over-year movement in the leading economic indicator has been a solid recession predictor, and it is nowhere near contraction territory now. Stocks agree, as they typically begin to lose ground in the latter stages of expansions, and there has been no sign of the overheating in cyclical segments that typically precedes recessions.

Looking through three-month-old GDP data from the first quarter would therefore seem to be the right investment approach.

The silver lining for investors is that soft growth will preserve accommodative policy settings. As long as recession is avoided, any pullback in stock prices should be viewed as a correction, not the end of the bull market.

BCA 2014 New York Investment Conference, Keynote Speaker: Jean-Claude Trichet

We would like to ensure you are aware that the BCA Research New York Investment Conference will be held September 15-16, 2014 at the Grand Hyatt Manhattan. The conference theme is Investment Opportunities In An Aging Bull Market, and this year’s conference will have even greater-than-usual focus on identifying opportunities in today’s tough investment climate.

The preliminary agenda for the event can be accessed at: Investment Opportunities In An Aging Bull Market

Click here to register for the 2014 New York Conference.

We are delighted to announce that our Monday keynote speaker will be Jean-Claude Trichet, former President of the European Central Bank and current Chairman of the Group of Thirty. His perspectives on the global outlook and the challenges facing policymakers are sure to be of great interest.

Additional topics to be addressed include:

  • What are the opportunities in alternative investments such as private equity, infrastructure and distressed debt?
  • Should you build exposure in emerging markets? Which frontier markets are attractive?
  • How much upside is left in the equity bull market? What is the optimal asset allocation?
  • How can behavioral finance teach us to make better investment decisions?
  • Will central banks lead us into deflation or inflation?
  • How will rising government debt burdens affect the economic and financial outlook?
  • Are new technologies set to unleash a new wave of creative destruction?
  • What geopolitical risks should investors focus on?

The conference program will allow for plenty of time for discussion and interaction with the audience, and the event will also provide you with the unique opportunity to network with senior investment professionals from around the world and with BCA strategists. BCA has been hosting exclusive investment conferences around the globe for over 50 years, and we invite you to join us in New York for what we expect may be our most topically diverse event yet. Confirmed speakers include George Magnus, Carmen Reinhart, Stephen Roach, and many others, guaranteeing a thought-provoking and value-added meeting.

The BCA New York Investment Conference sells out very quickly, and space is limited – click here to register today.

I hope you will join us in New York for what is sure to be an exciting and worthwhile meeting.

Sincerely,

Martin H. Barnes
Chief Economist