Those predicting a US recession are being confounded by mixed signals from the US economy. Official economic data, from revisions to Q4 2015 GDP right through to nonfarm payrolls that show the country routinely creating in excess of 200,000 jobs each month have left many doomsayers scratching their heads and wondering if they may have underestimated the strength of the underlying economy

Despite worrying data from the manufacturing sector and softness in consumer spending and sentiment readings, bright spots have included relatively buoyant durable goods and pending home sales. “Certainly, the economy isn’t exactly on fire at the moment but it doesn’t appear to be deteriorating either,” said Colin Phipps, chief economist at New York-based broker dealer, TCA Financial.

Much of the bearishness towards the US economy has its roots in suspicions that it is unable to achieve what some economists call ‘escape velocity’. Previous economic recoveries have typically been characterized by annualized GDP growth in excess of 4% and monthly job creation numbers in the 300-400k region.

“Going on the pattern of boom/bust previous economic cycles, we’re fast approaching the point where the bust phase of the cycle should be occurring,” said Phipps.

TCA Financial advises clients to take profits on stocks in cyclical industries and to consider holding cash until there is greater clarity on the outlook for the economy.

“There may be a little more upside but it’s worth risking that in order to guard against the increasing likelihood of a June rate hike,” concluded Phipps.

About TCA Financial:
TCA Financial is resolutely committed to helping our clients accumulate and preserve wealth by actively managing the deployment of their investment capital within the global financial markets. We have a proven, checkable track record of being able to accomplish this regardless of the prevailing macro-economic conditions because of our expertise and professionalism and because we know that markets, just like people, are all connected to varying degrees at varying times.