Roger Altman on Economic Resilience, Market Surprises, and Potential Storms Ahead

Surprising Economic and Market Resilience

• 💡 Roger Altman notes a surprising and confounding amount of resilience in both the economy and markets, which experts are struggling to explain.
• ⚠️ He posits that current resilience might be the calm before the storm, suggesting it may not last.

Factors Influencing Current Resilience

• 📈 Consumers and businesses engaged in anticipatory behavior (inventory stockpiling, advanced purchasing) due to tariffs, which delayed the impact.
• 💰 Real wages for hourly workers are up 2% in the first 5 months, the strongest growth in 60 years, contributing to consumer spending.
• 📊 Despite tariffs, inflation remains low, and unemployment data indicates solid employment, giving consumers spending power.
• 🚀 The wealth effect from markets reaching all-time highs (though lower if excluding the Magnificent 7) also supports consumer confidence.

Signs of Emerging Weakness

• 📉 Beginning signs of weakness are appearing in retail sales, industrial production, continuing claims, and home construction.
• 📉 US GDP forecasts have been revised downwards from the low twos to around 1%.
• ⚠️ Altman suggests that ongoing global events like wars and tariff uncertainty could cause hesitancy in consumers, businesses, and hiring.

M&A Environment and Future Outlook

• 💼 The M&A environment has been steady but not booming, with some recent announcements and a year-over-year increase in global dollar volume.
• 🤔 Altman expresses that if the economy and markets sail through the current confluence of destabilizing events as they have so far, it would be amazing, but he anticipates seeing more hesitation.
• 🎯 He acknowledges the possibility of being wrong, especially given the market's current all-time high, partly driven by the AI revolution.