Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments, tells us that the US economy is holding firm, with recession risk at just 20%, a strengthening labor market, and resilient consumer spending. He goes on to discuss stronger-than-expected earnings, the AI capex surge, a genuine industrial cycle, and what a new Fed Chair means for markets.

Anatomy of a Recession: Are Current Strong Earnings a Bubble?

Talking Markets with Franklin Templeton

Welcome to Talking Markets with Franklin Templeton. I'm your host, John Shugutsky from the Franklin Templeton Global Marketing Organization. As a forward-thinking asset manager, Franklin Templeton leverages cutting-edge strategies and deep industry insights to unlock opportunities to help grow wealth. We're your trusted partner for what's ahead.

I'm here today with Jeff Schulze for our monthly conversation focused on the state of the U.S. economy. Jeff is the Head of Economic and Market Strategy at ClearBridge Investments. ClearBridge is an active equity manager at Franklin Templeton offering a broad range of strategies across global markets. Jeff, welcome to the show. Excited to be here, John.

Jeff, let's kick things off as we normally do with the U.S. economy and the ClearBridge Recession Risk Dashboard. Have we witnessed any changes in the last month? Well, we haven't. If you look at the dashboard right now, out of those 12 individual indicators, and as a reminder, it's a stoplight analogy, 11 out of 12 of those are currently green, zero or yellow, and only one is red. So this is about as good of a dashboard as you're going to get.

And this output is historically consistent with recession odds of only 15% over the course of the next 12 months. Now, given the unresolved issues in the Middle East, we've nudged that modestly higher to 20%. But the key takeaway here is that the economy has been on a solid foundation all year and continues to be so. So, Jeff, the labor market has taken a turn for the better this year going from, you might say, zero to hero.

Anatomy of a Recession: Are Current Strong Earnings a Bubble?

Read the full transcript

The candid version is on a podcast,
not the earnings call.

Anatomy of a Recession: Are Current Strong Earnings a Bubble?

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.