October 2023 Chart Pack Summary: US Economy’s Reality Stronger Than the Perception


  • The US economy is trending stronger than many fear, in our view.
  • Recession indicators mixed, but not uniformly negative.
  • Any economic turndown is likely to be mild, in our view.

We are excited to release our October 2023 Chart Pack – our visual quarterly designed to walk investors through our views on:

  • What’s happening and why,
  • Predictions about what may come next,
  • Positioning in our RiverFront portfolios.

In today’s Weekly View, we created a concise synopsis of three selected visuals from our October 2023 Chart Pack. In our view, markets could stay volatile and range-bound through year-end, with US investors watching inflation and economic trends closely, as well as the upcoming US presidential election. Nonetheless, as we start to look towards 2024, we have been encouraged by the resilience in the US economy. Our asset allocation portfolios are slightly overweight stocks, with an emphasis on the US. We hope you find the chart pack a helpful tool for client meetings and conversations.

US Economy: Weak Perception VS. Strong Reality

Parts of the US economy are suffering from a lack of confidence about the future, in our opinion. This is evident in data such as low manufacturing sentiment, small business optimism, and consumer confidence.

However, the reality on the ground in the US economy is quite better than the perception and has been for much of the year. US GDP grew in the 2nd quarter, and the Atlanta Fed’s ‘GDPNow’ forecasting tool suggests even higher growth for Q3 (see chart, below).

We believe that the US economy is cooling, but do not foresee the US falling into deep recession in 2023. The situation overseas seems worse, with China flirting with deflation and Germany possibly in a recession.

Source: LSEG Datastream, Riverfront. Data daily as of 09.29.2023. Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time. The GDP Now nowcast GDP indicator was created by the Atlanta Federal Reserve and combines higher-frequency (e.g., monthly) economic data released before the GDP data to estimate growth in the current quarter.
Source: LSEG Datastream, RiverFront; data as of August 2023. Chart shown for illustrative purposes only. Past performance is no guarantee of future results.

Recession Watch: Indicators Mixed

Traditional harbingers of recession such as the US 3-month-to-10-year Treasury yield curve and the six- month change in the Leading Economic Index (LEI), have been warning of US recession risks for well over a year now. These reflect subdued sentiment in manufacturing and consumer sentiment, among other things.

However, other important economic indicators, such as credit spreads, employment (chart, right) and services sentiment have stayed robust — suggesting to us a mixed but not recessionary economy.

Chart Source: LSEG Datastream, Riverfront; data quarterly as of Q2 2023. Shown for illustrative purposes only. Past performance is no guarantee of future results. *Source: The Economist; What America’s next recession will look like; 06.01.2022, Updated 09.30.2022.

Recession Likely To Be Mild, In Our View

We believe the US will stay out of recession in 2023. However, we also think any future recession should be less severe given that US consumers and corporations are healthier than previous recessions:

  • Consumers are in good shape. US consumer debt (including mortgages, auto loans and credit card interest) as a percentage of disposable personal income is significantly lower than before the 2008 housing crisis (see chart, right).
  • Consumers also have roughly $2T more in excess savings (or ~9% of GDP) than they did prior to COVID-19, according to The Economist*.

Risk Discussion: All investments in securities, including the strategies discussed above, include a risk of loss of principal (invested amount) and any profits that have not been realized. Markets fluctuate substantially over time, and have experienced increased volatility in recent years due to global and domestic economic events. Performance of any investment is not guaranteed. In a rising interest rate environment, the value of fixed-income securities generally declines. Diversification does not guarantee a profit or protect against a loss. Investments in international and emerging markets securities include exposure to risks such as currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability. Please see the end of this publication for more disclosures.