{"id":8793,"date":"2025-09-09T00:48:11","date_gmt":"2025-09-09T00:48:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/8793\/"},"modified":"2025-09-09T00:48:11","modified_gmt":"2025-09-09T00:48:11","slug":"top-analyst-says-you-werent-crazy-for-thinking-the-economy-felt-worse-than-it-looked-the-last-3-years-the-rolling-recession-just-ended","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/8793\/","title":{"rendered":"Top analyst says you weren\u2019t crazy for thinking the economy felt worse than it looked the last 3 years. The \u2018rolling recession\u2019 just ended"},"content":{"rendered":"\n

Economic headlines have been grim recently. The jobs report from July shattered the narrative that the economy of 2025 was strong, revising previous figures downward and revealing something close to an 80% collapse in hiring, even as inflation crept upwards and layoffs rolled. August was another bad one, with just 22,000 jobs added. But what if that was the bottom of a secret, \u201crolling\u201d recession in place for nearly three years, dating back to 2022? That\u2019s what one of the top minds on Wall Street thinks.<\/p>\n

Morgan Stanley\u2019s Chief U.S. Equity Strategist Mike Wilson says the August report is actually more confirmation of his primary thesis that goes back several years. \u201cCentral to our view,\u201d Wilson\u2019s team wrote in a note published on the morning of September 8, \u201cis the notion that the economy has been much weaker for many companies and consumers over the past 3 years than what the headline economic statistics like nominal GDP or employment suggest.\u201d<\/p>\n

In other words, amid the many predictions<\/a> of a recession<\/a> about to hit the U.S. economy or a revival of 1970s-style stagflation<\/a>, Wilson has been banging the drum that the recession was already here, just in disguise. The good news is that if a recession was disguised, then the current, early-stage bull market has been, too: \u201cFriday\u2019s weak labor report provides further evidence of our thesis that we are now transitioning from a rolling recession to a rolling recovery. In short, we\u2019re entering an early cycle environment and the Fed cutting rates will be key to the next leg of the new bull market that began in April.\u201d<\/p>\n

According to Wilson and his team at Morgan Stanley, the recession never materialized as a sudden collapse or sharp spike in unemployment. Instead, weakness moved sector-by-sector from pandemic winners like tech and consumer goods to the rest of the economy, with each industry suffering its own downturn at different times. This \u201crolling recession\u201d meant the usual markers of broad economic pain\u2014soaring unemployment, plummeting GDP\u2014remained muted even as weakness mounted underneath the surface. \u201cWe saw most sectors of the economy go through their own individual recessions at different times,\u201d the bank argued.<\/p>\n

\"\" <\/p>\n

Several factors contributed to this slow-moving pain. Post-pandemic immigration surges, followed by stricter enforcement, distorted many traditional labor-market signals and clouded real-time interpretation of headline statistics. Median earnings growth for companies across the Russell 3000 index remained negative<\/a> for much of three years\u2014yet the overall stock market seemed to sidestep a crash, until recently.<\/p>\n

Story Continues <\/p>\n

Morgan Stanley points to April 2025, when the White House announced new tariffs in a move dubbed \u201cLiberation Day,\u201d as the recession\u2019s trough. Around this inflection point, leading indicators like earnings revisions breadth\u2014a proxy for corporate guidance\u2014showed dramatic, \u201cv-shaped\u201d rebounds for the first time since early pandemic recovery. Payroll revisions and job cut data also corroborated the bottom, peaking last spring and declining since.<\/p>\n

\u201cHistory suggests these revisions are pro-cyclical, getting more negative going into a recession and more positive once the recovery has begun,\u201d strategists note. \u201cIt appears this time is no different.\u201d The latest month\u2019s sharp rebound in payroll revisions supports the view that the rolling recession is over, Wilson wrote, ushering in a new early-cycle environment.<\/p>\n

Morgan Stanley\u2019s team argues that headline economic data\u2014nominal GDP, broad employment numbers\u2014lag reality and often miss serious underlying weakness. Classical models failed to spot the recession\u2019s rolling nature because sectors fell and recovered at different times. Government hiring further masked private-sector pain, and supply-chain disruptions, consumer confidence drops, and persistent negative median earnings growth painted a truer picture.<\/p>\n

Wilson argues that looking at earnings growth as well as consumer and corporate confidence surveys is a \u201cbetter way to measure the health of the economy.\u201d By those metrics, earnings growth has been negative for most companies over the past roughly three years, Wilson argues, and the V-shaped rebound in earnings revisions upward shows that corporate confidence \u201chas improved materially since Liberation Day.\u201d<\/p>\n

Morgan Stanley projects the Federal Reserve\u2019s rate cuts\u2014already underway from a 100 basis point cut triggered by labor weakness last summer\u2014will power a durable rebound. The new cycle, strategists argue, \u201cis setting up a strong finish into both year-end and 2026,\u201d provided monetary policy remains responsive enough to support growth.<\/p>\n

The equity strategists recommend \u201cstrapping in\u201d for volatility in coming months as seasonal choppiness and monetary uncertainty persist, but ultimately forecast broad-based earnings recovery and new all-time highs, especially as the Fed\u2019s cutting cycle commences firmly. Sectors like large cap healthcare, in particular, offer defensive value and earnings momentum in this transition, while small caps may catch up later as recovery broadens.<\/p>\n

Morgan Stanley\u2019s call marks a shift in how Wall Street interprets \u201crecession.\u201d Rather than a single event, downturns may come in waves, peaking at different times across the economy. For investors, the end of this rolling recession signals not only relief but renewed opportunity: the next bull market is now taking shape as fundamentals improve and monetary conditions turn supportive.<\/p>\n

For this story,\u00a0Fortune\u00a0used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.\u00a0<\/p>\n

This story was originally featured on Fortune.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Economic headlines have been grim recently. The jobs report from July shattered the narrative that the economy of…\n","protected":false},"author":2,"featured_media":8794,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,9296,113,61,60,9295,2395,9297],"class_list":{"0":"post-8793","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-earnings-growth","10":"tag-economy","11":"tag-ie","12":"tag-ireland","13":"tag-mike-wilson","14":"tag-morgan-stanley","15":"tag-nominal-gdp"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/8793","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=8793"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/8793\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/8794"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=8793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=8793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=8793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}