According to “brutally bad” economic data, the United States is on the verge of a recession, according to Chris Watling, CEO of financial consultancy firm Longview Economics, in an interview with CNBC this week.
The latest reading of the Leading Economic Index for the United States, which fell by 1.2% in March to its lowest level since November 2020, is one of the factors pointing to an approaching recession, according to the expert.
Furthermore, the typical recession timetable is one year after the inversion of the Treasury yield curve, when yields on shorter-dated assets climb above those on longer-term securities. According to Watling, the economic crisis may be just around the horizon because the curve first inverted in March 2022.
“Every time that has happened in the United States, there has been a recession.” So, I believe it is approaching; it is on its way. “It’s just a matter of timing,” he was quoted as adding.
Just last month, the inversion widened to negative 103.1 basis points, the greatest difference between shorter-dated and longer-term rates since September 1981, when the US economy was in the early stages of a recession.
Watling also warned of the implications for equities markets if a recession occurs.
“In our opinion, they will not come out unscathed.” I’m not even sure what related means. Profit margins climbed to record highs in 2021 and a little bit of 2022, and of course, when there is a lot of inflation around, you can have very good operating leverage, so you can get record high profit margins. When a recession hits, we have to take a twofold knock on profit margins. “You have to normalize them back to normal levels and then price in a recession,” he explained.
