The U.S. economy may not experience a “soft landing” after all. A soft landing occurs when economic growth slows enough to bring inflation below the Fed’s 2% target without tipping the economy into recession. Many on Wall Street expected that to be the case as central banks began lowering interest rates. Alicia Levine of BNY Wealth takes a more optimistic view. She believes the economy is experiencing a no-ground situation as it continues to expand without slowing down. “Bank profits are clearly better than expected so far, both in terms of revenue and net income. Net interest income is better than expected. So that’s a good sign for the economy,” said the firm’s head of investment strategy and equities. Tuesday on CNBC’s “Squawk Box.” “The other thing this shows is that our call for ‘no ground’ is actually working.” Her comments come after banks including Wells Fargo and JPMorgan last week reported a series of better-than-expected earnings Profitable results. Meanwhile, Bank of America reported strong results on Tuesday. Levine, who has a year-end target of 5,900 for the S&P 500, noted that third-quarter real gross domestic product growth looked “very close” to 3%. This would mark the second consecutive quarter of real GDP growth of 3%, with the economy growing at an annualized rate of 2.8% in the second quarter. “That’s not landing,” she continued. “That’s the goal, right? Our goal has always been to get it above 2%.” It’s not just bank profits that portend solid economic growth. Overall U.S. corporate profits hit a record high, about 60% above pre-Covid-19 pandemic levels, according to MRB Partners. The company also expects the economic expansion to continue. “The strong financial position of the U.S. corporate sector points to continued healthy levels of hiring and capital expenditures,” Peter Perkins, the firm’s global strategy partner, wrote in a note on Tuesday. “The corporate sector will continue to be A bulwark for the overall U.S. economy. “The economy and stocks may encounter some headwinds, especially if inflation persists and the Fed is unable to cut interest rates as investors expect.”
