Deutsche Bank economist Torsten Sløk doesn't think US consumers are worried about a recession.
And that is what matters.
In an email Friday after a round of economic data that was received negatively by markets, Sløk said that while he continued to have discussions with clients about the possibility of a recession, the average American wasn't worried about this risk.
Citing Google Search trends — which you could quibble with, but at least it's something — Sløk said that in 2007 the US consumer seemed to be onto something going awry before the recession really broke out.
Now? There's hardly any interest.
(Deutsche Bank)
Here's Sløk's commentary in full:
Over the past six months I have heard more clients say that despite strong nonfarm payrolls we will soon have a recession. Call it the Groundhog Day recession call. Eventually we will get a recession but the question is if a recession is just around the corner. The market chatter about a coming recession has been intensifying since 2014 when China was slowing and oil prices started falling and the dollar started rising and credit spreads started widening. The key discussion issue is how significant these forces are and most importantly, whether falling oil prices is good or bad for the US economy. Given these worries in markets it is worthwhile looking at whether people outside financial markets worry about a coming recession. The chart below shows US-based Google search interest in the word "Recession." In mid-2007 consumers were good at anticipating the coming recession, which started in December 2007. But looking at the most recent data, there are few signs that people outside financial markets are particularly worried about a recession. It makes sense because we are after all seeing job growth near 300,000.
Sløk, we'd note, has been one of the most bullish economists out there for some time, and he has maintained this stance as more and more commentary from Wall Street pounds the table on risks standing in the way of continued US economic progress and the impact this could have on financial markets.
For one thing, American manufacturing appears to be in a clear recessionary environment, but this sector accounts for about 12% of gross domestic product. Consumption trends are still strong, and Friday's retail sales report, which on the surface looks weak, actually indicated continued strength from US consumers beneath the headlines figures.
As George Pearkes at Bespoke Investment Group noted, year-over-year sales at every type of store except gas stations, electronics stores, and retail locations saw solid increases.