"Expect a 2015 Downturn in the US"

Economist David Levy, writing in the just-published June Levy Forecast, said, "The next recession will most likely begin in 2015," with global economic conditions visibly softening in this year's third quarter.

Levy, the chairman of the independent Jerome Levy Forecasting Center LLC (www.levyforecast.com), said, "The chances that the U.S. expansion will continue through 2015 appear more dubious, largely because it is hard to envision the rest of the global economy keeping itself out of recession for another year and a half or longer."

He noted that this summer financial markets may well be "whipsawed" by the bounce-back from the record-breaking winter of 2013-14.  One result, he said, could be a second-quarter GDP growth number considerably above market expectations.  The second quarter consensus number of 3.5%, Levy said, might actually be as high as 5-6%, reflecting a jump back to trend from the depressed first quarter and "pressure to cram extra activity into the present quarter to catch up with production, construction and other projects that fell behind during the winter."

USD Packs (PD)Profits, Levy said, have been strong in the second quarter and probably will turn out to have exceeded consensus expectations.

All of which, Levy wrote in the nation's oldest newsletter devoted to economic analysis, sets up high expectations for summer economic growth, which, he warned, is "likely to disappoint markets once again."

"As the second quarter activity, which is enhanced by extra output to make up for first quarter disruptions, gives way to a relatively ordinary third quarter, the growth rate derived from the comparison will probably fall well short of investors' rising expectations."

Based on this forecast, Levy recommended several courses of action for investors, including the following:

1. Be ready for a brief growth scare in the next couple of months, a bout of bond weakness that will be an opportunity to take positions in long Treasury instruments.

2. Expect stocks generally to benefit from rising earnings expectations – particularly with respect to domestic operations – as second-quarter guidance and earnings reports emerge. Wrote Levy, "the economy's probable outperforming of market estimates in the second quarter is likely to open a window for selling cyclically sensitive assets and weighting portfolios toward less cyclical or countercyclical assets."

About The Jerome Levy Forecasting Center

The Jerome Levy Forecasting Center LLC – the world leader in applying the macroeconomic profits perspective to economic analysis and forecasting – conducts cutting edge economic research and offers consulting services to its clients.  The goal of the Levy Forecasting Center is to improve its clients' business and investment performance by providing them with powerful insights into economic risks and opportunities – insights that are difficult or even impossible to achieve with conventional approaches to macroeconomic analysis.  Additional information may be found at www.levyforecast.com.

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