Consumers are feeling gloomy but are we still headed for recession?
With inflation “sufficiently well-behaved”, the main factors are now unemployment and wages, says our head of bond strategies Tim Hext.
“I think in the US it’s still the case that we are going to have a very mild recession at some point.
Whie it’s taken longer than expected, the impact of 5.25% of rate hikes in just over a year are starting to show through among consumers.
“The one thing that’s keeping the US economy ticking over still quite well is employment.
Jobs and wages should remain “not strong, but well-behaved” this year, which should stop any chance of near-term rate cuts, says Tim.
In Australia the chances of recession are far lower due to population growth, says Tim.
“But there is definitely a possibility we’ll have a GDP per capita recession. In other words, the economy will be better off but individually we may not feel that way.
Tim goes into detail here
Tim Hext is a Pendal portfolio manager and head of government bond strategies in our Income and Fixed Interest team.
Tim has extensive experience in banking, financial markets and funding including senior positions with NSW Treasury Corporation (TCorp), Westpac Treasury, Commonwealth Bank of Australia, Deutsche Bank, Bain & Co and Swiss Bank Corporation.
Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia.
The team won Lonsec’s Active Fixed Income Fund of the Year award in 2021 and Zenith’s Australian Fixed Interest award in 2020.
Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.
In 2023, Pendal became part of Perpetual Limited (ASX:PPT), bringing together two of Australia’s most respected active asset management brands to create a global leader in multi-boutique asset management with autonomous, world-class investment capabilities and a growing leadership position in ESG.
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