The economy becomes more and more strong, not lower, and “we, in the economic profession, must look at the mirror,” says the best analyst

“The consensus has been wrong since January,” said Sløk in a note broadcast to customers on Wednesday morning, adding that the average forecast of economists said that the US economy would slow down for nine months. “But the reality is that it simply did not happen … We, in the economic profession, must look at the mirror.”

Growth challenges expectations

GDP of the second quarter developed at an annualized rate of 3.8%, a surprisingly strong pace given the continuous effort of the federal reserve to reduce inflation. The GDPNOW model of Atlanta Fed suggests that growth can be even stronger in the third quarter, providing for 3.9%gains. Many economists expected the impact to train high interest rates, stricter credit conditions and the shock of the April release market to cause growth significantly.

Instead, the data tells another story. Consumer expenditure continued to prove to be resilients and commercial investments, far from withdrawing, have strengthened in the sectors linked to artificial intelligence, energy infrastructure and manufacturing reaction. Housing, often sensitive to interest rates, has shown surprising stability on the main regional markets. Sløk did not plunge into these details in the Wednesday edition of his Daily Spark, except to discuss employment growth. “This is the result of the slowdown in immigration,” he wrote, not an economic weakness.

“The main thing is that the American economy remains remarkably resilient,” said Sløk. “It becomes more and more difficult to argue that we are still waiting for the delayed negative effects of what happened six months ago,” referring to President Trump’s release day and the imposition of radical reciprocal rates. A high -level analyst has supported for years that most of Wall Street was wrong and that the Liberation Day represented the end of the beginning, rather than the start of the end.

Rolling in progress?

The chief strategist of the American actions of Morgan Stanley, Mike Wilson, invented a sentence to describe what has been going on in the economy for about three years: a “hilly recession”. The economy has been the subject of recession conditions quietly since 2022, Wilson discussed throughout, with a recession not being taken up by conventional measures but rather by crossing different segments of the economy, one at the same time. Wilson argues that titles’ figures such as GDP and unemployment have missed serious underlying struggles, including 80% collapse in hiring during the summer and the growth of the median of constantly negative remuneration.

Although neither he nor Sløk noted how their readings of the economy intersect, Wilson thinks that the economy led to last spring – contributing to the repression of the day of the white house against the prices. Federal employment was the only area not affected by the hilly recession, he noted, until the Doge of Elon Musk initiative was not spectacular enough.

In early September, Wilson asserted the report on weak jobs for August which had just been published to provide “another proof of our thesis according to which we are now moving from a rolling recession to a rolling resumption”.

“In short, we are entering an environment at the start of the cycle, and the Fed cup rates will be essential at the next stage of the new Haussier market that started in April,” Wilson wrote.

The report of jobs for September has not yet been released at that time of publication, but Wednesday, the private PAIA report of ADP showed a loss of jobs for September and a revision in negative territory for August. Bill Adams, chief economist of Comerica Bank, noted in a press release Fortune This result has been worse than expected, ADP now reporting decreases in three of the last four months. Commenting on the other news on Wednesday, which the government again closed, for the third time under President Trump, Adams noted: “The ADP report generally plays the second violin of the government’s report, but is more important while the government closes.” In other words, the rolling recovery appears on a dynamic stock market, but not on the job market. The president of the federal reserve, Jerome Powell, noted in September that it is a “low rental and low -fire” environment.

What it means for investors

For markets, the diagnosis of Sløk has important implications. If the economy is not weakening, but strengthening, the prospects for inflation could bow higher. Central inflation released from its peaks in 2022, but Sløk warns strong growth combined with an easier monetary policy could revive price pressures.

“The rising risks of inflation increase, especially if the Fed continues to reduce rates,” Sløk wrote on Wednesday.

In September, the central bank has followed its reduction in the first rate for years, trusting that inflation turned to the target. The markets have since an additional price in the coming quarters. In fact, on September 30, Sløk had argued that “the economy is strong and inflation is high”, citing 12 different data points (including tourism levels and a high number of visits to the statue of freedom). He then launched a potentially daring appeal in the light of the ADP data of the next day, arguing that the consensus of the next job report of 50,000 wages was “too pessimistic”.

However, Sløk’s most sharp remarks did not go against decision-makers or the markets, but the forecast community itself. By predicting the weakness that has never arrived several times, he argued that economists have undermined their credibility.

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