Long-time stock market bull Jeremy Siegel is getting more cautious about a potential recession.The Wharton professor said that a slew of recent economic data did not include the impact of the US banking crisis. Despite the potential for a recession, Siegel believes the October stock market lows will hold firm. Loading Something is loading.
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Long-time stock market bull Jeremy Siegel is growing more concerned about the potential for an economic recession.
In the “Behind the Markets” podcast on Friday, the Wharton professor highlighted a slew of recent economic data that showed worrying signs of weakening, including a drop in job openings, a rise in jobless claims, and softness in the manufacturing sector.
And while the March jobs report was solid, it did show one concerning sign, according to Siegel: a decline in the number of weekly hours worked.
“What wasn’t noticed enough was another 1/10th drop in hours worked. A 1/10th of an hour work difference is equivalent to almost 300,000 workers at the same number of hours, so if you have a 1/10th drop in the number of hours worked per week, it’s like a 300,000 drop in payroll,” he said.
The decline in hours worked last month offset the surge that was seen in January, which points to a growing softness in the labor force, Siegel warned.
But perhaps most concerning to Siegel is the fact that much of the recent weakness in economic data doesn’t include the impact of the US banking crisis that was sparked by the collapse of Silicon Valley Bank early last month.
“We’ve had an upward trend in [jobless] claims. It’s not a falling-apart economy, but definitely signs of weakness, and one thing is the most important of all: all of this data is really pre-SVB, the banking crisis,” Siegel said.
“We will not get until the next 4-6 weeks really a lot of data about the effect of the banking crisis. That does concern me and keeps me defensive going forward in terms of a recession,” he added. “I’m just saying that my feeling is the probability of a recession has gone up.”
But if a recession does materialize, Siegel won’t be heading for the exits in terms of what he does with his stock portfolio, and he’s confident any decline in stocks won’t exceed the mid-October lows.
“I always think recessions are great buying opportunities. I don’t sell [stocks] in anticipation of [a recession], but I know a lot of other people do which could lead to softness [in stocks but] no crash. I think the October lows are holding,” Siegel said.