Wharton's Jeremy Siegel says 'YOLO' consumers are driving the economy, but warns 'this could be one of the last good times'
Revised first quarter GDP growth and some other data released recently show that the economy is doing quite well despite the uncertainties. But an economist warns the force could be a thing of the past.
What happened: The economy appears to be progressing smoothly, with resilient consumers remaining sheltered from the impact of higher borrowing costs, Jeremy said Wharton professor Siegel in WisdomTree's weekly commentary.
"It's the 'YOLO' (you only live once) consumer who travels and enjoys the summer," the economists said. But he warned of the trajectory ahead.
"But also, this could be one of the last good times for the economy before summer ends and credit card bills come due and then we go back to school and September to October have been times of some risky periods for the markets."
The economist said it would be a mistake if the Federal Reserve allowed the labor market to drop significantly before it stops climbing and begins to ease.
See also: How to Invest in Startups
Siegel conceded that he did not expect the labor market and the real economy to be as strong as they have been, given that the real interest rates have increased significantly and liquidity has decreased.
"Still, I don't think the second half will be a good time for the markets," he said, adding that it is also unlikely to deteriorate in any way spectacular. He sees a battle in market dynamics between recession fears and a slowdown. The Fed will likely respond by providing more housing and lowering rates, he added.
Why it matters: After a pause in June, the Fed is widely expected to raise the fed funds rate when the monetary policy arm meets later this month -this. The futures market started pricing in a 94.9% chance of a 25 basis point rise to 5.25%-5.50%.
But some analysts are optimistic that consumer price inflation in June will surprise on the downside and prices will continue on a downward trajectory in the coming months . This could give the Fed leeway to abandon its hawkish stance.
Siegel said: "There are clearly more hawks than doves at the Fed, although I still think the Fed should pause hikes and monitor the cumulative impact of tightening already in place."
Read Next: New York Fed Survey Shows Lowest Near-Term Inflation Expectations Since April 2021
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Revised first quarter GDP growth and some other data released recently show that the economy is doing quite well despite the uncertainties. But an economist warns the force could be a thing of the past.
What happened: The economy appears to be progressing smoothly, with resilient consumers remaining sheltered from the impact of higher borrowing costs, Jeremy said Wharton professor Siegel in WisdomTree's weekly commentary.
"It's the 'YOLO' (you only live once) consumer who travels and enjoys the summer," the economists said. But he warned of the trajectory ahead.
"But also, this could be one of the last good times for the economy before summer ends and credit card bills come due and then we go back to school and September to October have been times of some risky periods for the markets."
The economist said it would be a mistake if the Federal Reserve allowed the labor market to drop significantly before it stops climbing and begins to ease.
See also: How to Invest in Startups
Siegel conceded that he did not expect the labor market and the real economy to be as strong as they have been, given that the real interest rates have increased significantly and liquidity has decreased.
"Still, I don't think the second half will be a good time for the markets," he said, adding that it is also unlikely to deteriorate in any way spectacular. He sees a battle in market dynamics between recession fears and a slowdown. The Fed will likely respond by providing more housing and lowering rates, he added.
Why it matters: After a pause in June, the Fed is widely expected to raise the fed funds rate when the monetary policy arm meets later this month -this. The futures market started pricing in a 94.9% chance of a 25 basis point rise to 5.25%-5.50%.
But some analysts are optimistic that consumer price inflation in June will surprise on the downside and prices will continue on a downward trajectory in the coming months . This could give the Fed leeway to abandon its hawkish stance.
Siegel said: "There are clearly more hawks than doves at the Fed, although I still think the Fed should pause hikes and monitor the cumulative impact of tightening already in place."
Read Next: New York Fed Survey Shows Lowest Near-Term Inflation Expectations Since April 2021
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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