Macquarie Analysts Warn of Potential US Hard Landing Amid Strong September Employment Report
In a recent report, Macquarie analysts have highlighted the possibility of a US hard landing despite the strong September employment report reviving the "American exceptionalism" narrative. The analysts caution that economic concerns may shift towards fiscal tightening rather than monetary policy in the near future.
According to Macquarie, the current US deficit stands at -7% of GDP, and they expect this issue to be addressed after the 2024 presidential election. They suggest that fiscal adjustments are more likely to occur under a Kamala Harris administration than under a Donald Trump administration, indicating that post-election policies could significantly impact the economic outlook.
The firm remains cautious about the medium-term outlook for the US economy, especially with the potential for fiscal tightening to reignite concerns about a hard landing. They emphasize the importance of observing how various Fed officials, including Neel Kashkari, Raphael Bostic, and Alberto Musalem, respond to the latest employment data in shaping future monetary policy decisions.
Analysis:
In simple terms, Macquarie analysts are warning that despite positive employment data, there are concerns about a potential US hard landing due to fiscal tightening in the future. This could have significant implications for the US economy and financial markets, so investors should pay attention to how policymakers and the Federal Reserve respond to these challenges to make informed decisions about their investments.