Jerome Powell: "There's no sign of a broader slowdown that I can see in the economy"

You see continuing shifts in consumption, you see some sales going down, but overall spending is very strong.  The consumer's in really good shape financially.  They're spending.  There's no sign of a broader slowdown that I can see in the economy.

~ Federal Reserve chairman Jerome Powell, FOMC meeting, June 15, 2022

Moody's Analytics on the wealth effect

We estimate that the wealth effect on total consumer spending is 4.5 cents.  That is, for every $1 change in household wealth, consumer spending ultimately changes by 4.5 cents.  Close to one-fourth of the growth in consumer spending during the current economic expansion, and one-third of the spending over the past year, is thus due to the wealth effect.  The wealth effects are especially large for spending on travel and home improvement, and small for groceries and drugstores.  

The wealth effects are at their maximum one year after the change in wealth, and they are bigger when asset prices are falling than when prices are rising.  This suggests that if we were to suffer a major correction in stock price or housing values, consumer spending and the broader economy would be substantially impacted.

~ Moody's Analytics, "Weighing the Wealth Effect," March 2018

Jeffrey Frankel: "Economic activity is not falling" (2022)

Economic activity is not falling.  Quite the contrary.  It is booming.

[...]

At some point there will be another recession.  But the odds that it will hit the U.S. this year are nowhere near has high as people seem to think.  In a random year, the odds are about 15%.  Currently, they are higher than that.  But not much.

~ Jeffrey Frankel, Harvard professor and member of the NBER Business Cycle Dating Committee from 1992-2019

Dan Skelly: "We still don't see an economic contraction"

The first part of the bear was this inflation and rates and derating in the [P/E] multiple.  And we've seen that play out.  Multiples in the S&P are off 20% or so year-to-date.  The second part of it, in our view, is the earnings hit.  And so we have seen, obviously, blowups in some of those most acutely sensitive to over-earning in the Covid period - so the retailers of the world who over-ordered inventory and maybe have a little bit of skew to that lower-end income scale who's getting particularly impacted by food and gas today.  So we've seen that.  We think that that basically broadens out a bit more to some other parts of the market.  That being said, we see this being limited to a multiple and earnings hit.  So, yes, there's probably a volatile summer ahead of us, but we still don't see an economic contraction.  And with that, you're probably going to be limited to 5, 10% further downside [in the stock market.]

~ Dan Skelly, head of market research & strategy, Morgan Stanley Wealth Management, Bloomberg TV interview, June 10, 2022

Gloomy headlines on supply chain problems

“No End In Sight For The COVID-Led Global Supply Chain Disruption” ~ Forbes, September 3, 2021 

“Global Supply Problems Worsen” ~ The Wall Street Journal, October 9, 2021 

“Snarled shipping lanes could mean empty shelves come holiday shopping time” ~ New York Post, October 12, 2021

“How the Global Supply Chain Failed” ~ The New York Times, October 23, 2021

October 9, 2021

Janet Yellen: "There's nothing to suggest that a recession is in the works (2022)

I don't think we're (going to) have a recession.  Consumer spending is very strong.  Investment spending is solid...  I know people are very upset and rightly so about inflation, but there's nothing to suggest that a... recession is in the works.

[...]

I believe there is a path through this that entails a soft landing...  Is there a recession risk?  Of course there's a recession risk.  But is it likely?  I don't think so.

~ Treasury Secretary Janet Yellen, New York Times Dealbook event, June 9, 2022

Peter Atwater on how those at the top have leveraged asset inflation

The other place where I think there's been insufficient attention paid is to the excesses of those at the very top.  If you look at the extension of credit, for example, in the private banking space since the financial crisis, it's extraordinary.  A bank like JPMorgan has more private banking loans outstanding today than it has credit card loans.  So you have a massive amount of credit that has been extended, you have an oversupply of elite product providers, service providers, whether it's luxury goods, hotels.  The sense that the elite are different and will never succumb to any kind of a cycle is just mindboggling to me.  And so nobody has contemplated the biggest potential losses could be among the customers that have heretofore been the safest.

[...]

The whole mindset of the financial elite was "Don't sell it, borrow against it.  Because if I have to sell it, I incur an enormous tax event."  And so what they've all done is to keep borrowing against it in the belief that the valuations of whatever it was were permanent.  The art collection...  It's masterful tax strategy, but it is completely devoid of a connection to reality.

~ Peter Atwater, June 2, 2022