Ed Yardeni: Strong consumers will help economy avoid hard landings

• According to Ed Yardeni the economy could prove resilient and the stock market could soar another 8% in the year ahead
• Yardeni claimed that strong consumers can stop the economy from experiencing any “landing”.
• Yardeni stated that the consumer didn’t understand the recession memo, and they continue spending.

Ed Yardeni, a veteran investment strategist, sees the stock exchange jumping up to 8% before the year ends as the economy proves more resilient than many expect.

In an interview with CNBC last Wednesday, Yardeni stated that consumers are strong and that their spending can stop the economy from experiencing the type of “landing”, as many economists believe.

“I think that’s what’s really making the difference for you.” [stock] Market is the strength of an economy. It’s been amazing. Everyone has been debating about whether or not we will have a soft or hard landing. Yardeni claimed that “there’s no landing whatsoever.” “The consumer didn’t understand the recession memo, and they continue to spend.”

That dynamic, driven by a strong consumer, gives Yardeni confidence that the S&P 500 could finish the year at 4,300, which would be a solid turnaround from its mid-October depth of 3,491. At its low, the S&P 500 was down 28% from its record high, but at Yardeni’s target the S&P 500 would finish the year down just 10%.

Yardeni also stated that the payroll employment numbers “have been extraordinarily strong” and are helping to boost economic activity.

“Jobs are growing. The wages are growing just a little faster that the prices. All of this adds up to a consumer in great shape. Additionally, there are excess savings of $1-$2 trillion. Yardeni stated that there is still a lot of liquidity in the balance sheets of consumers.

Yardeni believes that the trend towards easing inflation will continue, which is another factor that is helping the economy avoid a hard landing. Investors would be delighted if the Federal Reserve halted its excessive interest rate increases. Moderation in inflation is a good sign.

“[The] Durable goods inflation rates have fallen. The trend for energy prices downwards continues. This will reduce inflation. Yardeni indicated that durable goods inflation could see negative year-overyear figures by the early part of next year. 

Yardeni said that he took the recent comments by Fed Presidents James Bullard, that more interest rate rises might be necessary if inflation stays high, as a sign that the stock exchange mostly ignored these comments.

“I took that very positively and it was a sign that markets are just getting bored here with all this talk from the Fed. Yardeni stated that it was all about the economic indicators…