Despite Thursday’s weaker-than-expected GDP figure, which hinted at a slowing economy, Trusist Co-Chief Investment Officer & Chief Market Strategist Keith Lerner joins Market Domination to explain why this number doesn’t accurately reflect the economy’s growth trajectory.
Lerner argues that the GDP data was fine "underneath the hood," showing that consumers and businesses were still spending, and underlying demand remained robust. He notes, "the market’s hanging in there really well," emphasizing that a deeper examination of the GDP components revealed "there’s still solid economic growth."
On the inflation front, Lerner acknowledges that he had anticipated a post-pandemic economic slowdown. However, even with solid growth, he remains optimistic that inflation can be brought down to the 2% target. Addressing concerns about stagflation, he states, "It’s a risk, not our base case."
Lerner points to the strong performance of the Energy (XLE), Financials (XLF), and Industrials (XLI) sectors as evidence that "the market is telling you that we don’t have a growth problem at this point." This market behavior reinforces his view that the underlying economic fundamentals remain robust, despite the weaker GDP reading.
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