""Central to our view," Wilson's team wrote in a note published on the morning of September 8, "is the notion that the economy has been much weaker for many companies and consumers over the past 3 years than what the headline economic statistics like nominal GDP or employment suggest.""
""Friday's weak labor report provides further evidence of our thesis that we are now transitioning from a rolling recession to a rolling recovery. In short, we're entering an early cycle environment and the Fed cutting rates will be key to the next leg of the new bull market that began in April.""
"According to Wilson and his team at Morgan Stanley, the recession never materialized as a sudden collapse or sharp spike in unemployment. Instead, weakness moved sector-by-sector from pandemic winners like tech and consumer goods to the rest of the economy, with each industry suffering its own downturn at different times."
July and August labor reports showed sharply reduced hiring, downward revisions, rising inflation, and continuing layoffs. Many companies and consumers have experienced weaker conditions for roughly three years despite headline GDP and employment figures. Weakness migrated sector-by-sector from pandemic winners such as tech and consumer goods to the broader economy, producing a rolling recession rather than a sudden collapse. Recent weak labor data aligns with a shift from rolling recession to rolling recovery and suggests an early-cycle environment. Federal Reserve rate cuts are likely to be a key driver for the next leg of the new bull market that began in April.
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