Economists polled by The Wall Street Journal believe the U.S. economy is coming off its hottest summer stretch since 2020. But if that proves to be true, then why are Wall Street luminaries like Bill Gross and Bill Ackman warning that a long-expected economic downturn has already begun? Gross even said that a recession could commence before the end of 2023, which is less than three months away.
For better or worse, investors seem to be taking these warnings seriously. They’ve been blamed for helping send Treasury yields lower after the 10-year
briefly pierced 5% on Monday for the first time since 2007. See: Bill Ackman cashes out bet against Treasury bonds as yields hit 16-year highs See: Why Bill Gross expects a U.S. recession to begin by year’s end As investors await the release of U.S. third-quarter GDP data on Thursday, which is expected to show that the economy expanded at a 4.7% pace from the beginning of July through the end of September, some, including former Merrill Lynch economist David Rosenberg, have warned that a “summer bump” in U.S. economic activity is already fading. See: GDP bonanza: U.S. economy may have grown 5% in the third quarter Rosenberg rattled off a litany of evidence to support the case that Wall Street’s hopes for a soft landing have been misplaced, noting that consumers appear to have finally exhausted their pandemic savings as borrowing costs start to bite. That millions of borrowers had to start repaying student loan …