Finance
A ‘soft landing’ is still on the table, economists say
Published
9 months agoon

Traders on the floor of the New York Stock Exchange during afternoon trading on Aug. 02, 2024.
Michael M. Santiago | Getty Images
Recession fears led to a sharp stock-market selloff in recent days, with the S&P 500 index posting a 3% loss Monday, its worst in almost two years.
Weaker-than-expected job data on Friday fueled concerns that the U.S. economy is on shaky footing, and that the Federal Reserve may have erred in its goal of achieving a so-called “soft landing.”
A soft landing would mean the Fed charted a path with its interest-rate policy that tamed inflation without triggering an economic downturn.
Federal data on Friday showed a sharp jump in the U.S. unemployment rate. Investors worried this signaled a “hard landing” was becoming more likely.
However, the odds of a recession starting within the next year are still relatively low, economists said.
In other words, a soft landing is still in the cards, they said.

“I think far and away the most likely scenario is a soft landing: The economy avoids an economic downturn,” said Mark Zandi, chief economist at Moody’s.
Likewise, Jay Bryson, chief economist at Wells Fargo Economics, said a soft landing remains his “base case” forecast.
But recession worries aren’t totally unfounded due to some signs of economic weakness, he said.
“I think the fears are real,” he said. “I wouldn’t discount them.”
Avoiding recession would also require the Fed to soon start cutting interest rates, Zandi and Bryson said.
If borrowing costs remain high, it increases the danger of a recession, they said.
Why are people freaking out?
The “big shock” on Friday — and a root cause of the ensuing stock-market rout — came from the monthly jobs report issued by the Bureau of Labor Statistics, Bryson said.
The unemployment rate rose to 4.3% in July, up from 4.1% in June and 3.5% a year earlier, it showed.
A 4.3% national jobless rate is low by historical standards, economists said.
But its steady increase in the past year triggered the so-called “Sahm rule.” If history is a guide, that would suggest the U.S. economy is already in a recession.
The Sahm rule is triggered when the three-month moving average of the U.S. unemployment rate is half a percentage point (or more) above its low over the prior 12 months.
That threshold was breached in July, when the Sahm rule recession indicator hit 0.53 points.
Goldman Sachs raised its recession forecast over the weekend to 25% from 15%. (Downturns occur every six to seven years, on average, putting the annual odds around 15%, economists said.)
Zandi estimates the chances of a recession starting over the next year at about 1 in 3, roughly double the historical norm. Bryson puts the probability at about 30% to 40%.
The Sahm rule may not be accurate this time
However, there’s good reason to think the Sahm rule isn’t an accurate recession indicator in the current economic cycle, Zandi said.
This is due to how the unemployment rate is calculated: The unemployment rate is a share of unemployed people as a percent of the labor force. So, changes in two variables — the number of unemployed and the size of the labor force — can move it up or down.
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The Sahm rule has historically been triggered by a weakening demand for workers. Businesses laid off employees, and the ranks of unemployed people swelled.
However, the unemployment rate’s rise over the past year is largely for “good reasons” — specifically, a big increase in labor supply, Bryson said.
More Americans entered the job market and looked for work. Those who are on the sidelines and looking for work are officially counted amid the ranks of “unemployed” in federal data, thereby boosting the unemployment rate.
The labor force grew by 420,000 people in July relative to June — a “pretty big” number, Bryson said.
Meanwhile, some federal data suggest businesses are holding on to workers: The layoff rate was 0.9% in June, tied for the lowest on record dating to 2000, for example.
‘The flags are turning red’
That said, there have been worrying signs of broader cooling in the labor market, economists said.
For example, hiring has slowed below its pre-pandemic baseline, as have the share of workers quitting for new gigs. Claims for unemployment benefits have gradually increased. The unemployment rate is at its highest level since the fall of 2021.
“The labor market is in a perilous spot,” Nick Bunker, economic research director for North America at job site Indeed, wrote in a memo Friday.
“Yellow flags had started to pop up in the labor market data over the past few months, but now the flags are turning red,” he added.
Other positive signs
There are some positive indicators that counter the negatives and suggest the economy remains resilient, however.
For example, “real” consumer spending (i.e., spending after accounting for inflation) remains strong “across the board,” Zandi said.
That’s important since consumer spending accounts for about two-thirds of the U.S. economy. If consumers keep spending, the economy will “be just fine,” Zandi said.
I think far and away the most likely scenario is a soft landing: The economy avoids an economic downturn.
Mark Zandi
chief economist at Moody’s
Underlying fundamentals in the economy like the financial health of households are “still pretty good” in aggregate, Bryson said.
It’s also a near certainty the Fed will start cutting interest rates in September, taking some pressure off households, especially lower earners, economists said.
“This is not September 2008, by any stretch of the imagination, where it was ‘jump into a fox hole as fast as you can,'” Bryson said. “Nor is it March 2020 when the economy was shutting down.”
“But there are some signs the economy is starting to weaken here,” he added.
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Finance
These are 3 big things we’re watching in the stock market this week
Published
41 minutes agoon
April 27, 2025
A security guard works outside the New York Stock Exchange (NYSE) before the Federal Reserve announcement in New York City, U.S., September 18, 2024.
Andrew Kelly | Reuters
The stock market bounce last week showed once again just how dependent Wall Street has become on the whims of the White House.

U.S. brands are rapidly losing their appeal in China as locals increasingly prefer competitive homegrown players, especially as economic growth slows, according to a TD Cowen survey released Thursday. While overall preference for Western brands dropped to 9%, down from 14% last year, certain American companies face higher risks than others, the report said, citing in-person interviews of 2,000 consumers with varied income levels in larger Chinese cities. TD Cowen partnered with an unnamed Beijing-based advisory firm to conduct the survey in February 2025, following a similar study in May 2024. The analysts see Apple ranking among the better-positioned brands in China. But they warned that several other American companies face high regional risks despite management optimism. China’s top leaders on Friday acknowledged the growing effect of trade tensions, and pledged targeted measures for struggling businesses. The official readout stopped short of a full-on stimulus announcement. “This year’s survey was conducted before the US-China trade war intensified, though threats were on the horizon,” the TD Cowen analysts said. “Add this factor to the equation, and it’s easy to see why uncertainty will remain elevated and households are likely to remain cautious going forward.” The survey found income expectations declined, with the share of respondents expecting a decline in pay over the next 12 months rising to 10% from 6%. In particular, Chinese consumers plan to spend less on a beauty items over the next six months, the survey showed, while increasing their preference for Chinese brands. U.S. cosmetics giant Estée Lauder retained first place in terms of highest awareness among Western beauty brands in China, but preference among consumers dropped to 19.6% of respondents, down from 24.3% last year. That contrasted with increases in respondents expressing a preference for the second and third market players Lancome and Chanel, respectively. In the quarter that ended Dec. 31, Estée Lauder said its Asia Pacific net sales fell 11%, due partly to “subdued consumer sentiment in mainland China, Korea and Hong Kong.” Asia Pacific accounted for 32% of overall sales in the quarter. In the lucrative sportswear category, Nike “lost meaningful preference in every category” versus last year, while local competitors Li-Ning and Anta saw gains, the survey found. TD Cowen’s analysis showed that among U.S. sportswear brands facing the most earnings risk relative to consensus expectations, Nike has the highest China sales exposure at 15%. “The China market is one characterized as a growth opportunity for sport according to Nike management in its recent fiscal Q3:25 earnings call in March 2025,” the analysts said, “but that the macro offers an increasingly challenging operating environment.” It’s not necessarily about slower growth or nationalism. While the survey found a 4-percentage-point drop in preference for foreign apparel and footwear brands, it also showed a 3-percentage-point increase in the inclination to buy the “best” product regardless of origin. “The implied perception here is that Western brands are offering less in the way of best product or value,” the TD Cowen analysts said. Starbucks similarly is running into fierce local competition while trying to maintain prices one-third or more above that of competitor Luckin Coffee, the report said. The survey found that the U.S. coffee giant “lags peers in terms of value and quality perception improvement.” Other coffee brands such as Manner, Tim’s, Cotti, %Arabica and M Stand have also expanded recently in China. Starbucks’ same-store sales in China fell 6% year on year in the quarter that ended Dec. 29, bringing the region’s share of total revenue to just under 8%. More worrisome is that a highly anticipated coffee boom in China may not materialize. “We note daily and weekly frequency of purchase among coffee drinkers are decreasing, suggesting the coffee habit seen in the U.S. is not taking hold in China,” the analysts said. They noted a new ownership structure for Starbucks‘ China business would be positive for the stock given the lack of near-term catalysts. TD Cowen rates Starbucks a buy, but has hold ratings on Nike and Estée Lauder.
Finance
Apple iPhone assembly in India won’t cushion China tariffs: Moffett
Published
24 hours agoon
April 26, 2025

Leading analyst Craig Moffett suggests any plans to move U.S. iPhone assembly to India is unrealistic.
Moffett, ranked as a top analyst multiple times by Institutional Investor, sent a memo to clients on Friday after the Financial Times reported Apple was aiming to shift production toward India from China by the end of next year.
He’s questioning how a move could bring down costs tied to tariffs because the iPhone components would still be made in China.
“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems. Now granted, it helps to some degree,” the MoffettNathanson partner and senior managing director told CNBC’s “Fast Money” on Friday. “I would question how that’s going to work.”
Moffett contends it’s not so easy to diversify to India — telling clients Apple’s supply chain would still be anchored in China and would likely face resistance.
“The bottom line is a global trade war is a two-front battle, impacting costs and sales. Moving assembly to India might (and we emphasize might) help with the former. The latter may ultimately be the bigger issue,” he wrote to clients.
Moffett cut his Apple price target on Monday to $141 from $184 a share. It implies a 33% drop from Friday’s close. The price target is also the Street low, according to FactSet.
“I don’t think of myself as the biggest Apple bear,” he said. “I think quite highly of Apple. My concern about Apple has been the valuation more than the company.”
Moffett has had a “sell” rating on Apple since Jan. 7. Since then, the company’s shares are down about 14%.
“None of this is because Apple is a bad company. They still have a great balance sheet [and] a great consumer franchise,” he said. “It’s just the reality of there are no good answers when you are a product company, and your products are going to be significantly tariffed, and you’re heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy.”
Moffett notes Apple also isn’t getting help from its carriers to cushion the blow of tariffs.
“You also have the demand destruction that’s created by potentially higher prices. Remember, you had AT&T, Verizon and T. Mobile all this week come out and say we’re not going to underwrite the additional cost of tariff [on] handsets,” he added. “The consumer is going to have to pay for that. So, you’re going to have some demand destruction that’s going to show up in even longer holding periods and slower upgrade rates — all of which probably trims estimates next year’s consensus.”
According to Moffett, the backlash against Apple in China over U.S. tariffs will also hurt iPhone sales.
“It’s a very real problem,” Moffett said. “Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple.”
Apple stock is coming off a winning week — up more than 6%. It comes ahead of the iPhone maker’s quarterly earnings report due next Thursday after the market close.
To get more personalized investment strategies, join us for our next “Fast Money” Live event on Thursday, June 5, at the Nasdaq in Times Square.

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