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The world’s largest economy is most likely to stay out of a recession in the next 12 months, according to investors responding to Seeking Alpha’s July Sentiment Survey.
The SA Sentiment Survey takes the temperature of what investors are thinking about market themes, the economy and other investment topics. The July survey showed most respondents believed the likelihood of a recession is at 50% or less, with that view held at an overall rate of 85%.
The survey question,”What’s the probability of a U.S. recession in the next 12 months?,” landed 985 responses, and of that, 49.2% of investor respondents said the chances of a recession over the next year were 25%.
Investors at a 27% rate said the odds of contraction were 50/50, and 8.8% said there was no chance of a recession. The survey also found 11.3% see a 75% probability of a recession, and 3.7% said there’s a 100% chance of a recession.
Outside the survey, “soft landing” expectations were on the rise, Bank of America investment strategists said Friday, with consensus projecting any U.S. slowdown will be transitory as Federal Reserve rate cuts would “work quickly and forcefully.”
Meanwhile, the release of the June jobs report has spurred a pickup in market talk about the Sahm Rule recession indicator. The rule says that if the three-month average of the unemployment rate is 0.50 percentage point or more above its low over the prior 12 months, then the U.S. is in the early months of a recession.
The Sahm Recession Indicator was 0.43 in June, according to tracking by the St. Louis Federal Reserve. That reading suggests a formal recession warning could start as early as the next update for July, according to Seeking Alpha Analyst James Picerno.
“Recession risk has risen, but it’s still premature to confidently declare that a downturn has started,” Picerno said in a SA column this week.
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