The US economy is much stronger than people think, and there is “no evidence” of an impending slowdown or recession, noted investor Kevin O’Leary.
†I’m not saying we won’t get one, but anyone who says it’ll be around the corner next week is just wrong,” he told CNBC’s “Squawk Box Asia” on Thursday.
“There is no data, there is no evidence, there are no numbers, there is no consumer tendency to slow down yet,” he said.
The chairman of O’Shares ETFs said he has invested in a wide variety of sectors, from commercial kitchens and wireless charging to fitness equipment and greeting cards. And he has seen “no indication” of a recession.
“I see their tear plates every week. We don’t see a slowdown yet,” he said, referring to a document summarizing key information about a company. “I think I’ll be one of the first to see it. In that respect I’m kind of a canary in the coal mine.’
He says consumption is still going well at the moment.
US GDP fell 1.5% in the first quarter of the year despite strong consumer spending due to weak corporate and private investment.
There are two reasons why it is difficult to predict a recession, O’Leary said.
The first is that $4.5 trillion has been added to the U.S. economy in recent years “from a helicopter in the hands of consumers and businesses across the country.”
That’s an unprecedented amount of money being pumped into the system, he said.
“I deal with numbers every week, of what the consumer is buying with the money they have, they’ve gotten so much of it in the last three years and I’m not in the camp that says there’s a dramatic recession,” he added. . †
Second, technology has increased productivity.
The direct-to-consumer model is now used in every sector of the economy, meaning higher gross margins and more customer data for businesses. It’s much more efficient and productive, O’Leary said.
“Those who really say we’re going to have a massive recession could be wrong and missing out on returns as this market is slowly scrambling its way back,” he said.
“I am digressing to the side of a soft landing in terms of my investment strategy,” said the investor in “Shark Tank.”
He said everyone thinks the central bank is out of control, but he believes Fed Chair Jerome Powell is “pretty good” at balancing inflation and employment.
Even if there are signs of a slowdown or recession, that risk appears to be already ingrained in stock prices given the large corrections in many indices, O’Leary noted.
“Anyone who tells me it’s the end of the free world, as we know, isn’t looking at the data,” he said, adding that some private companies he’s invested in have had “spectacular quarters.”
The economy will slow down at some point, but he said he hasn’t seen it yet.
“I rely on numbers, not talking heads. I get talking heads all day long telling me what they think is going to happen. I look at the numbers. Numbers don’t lie. Cash flow doesn’t lie. That’s what I care about, ” he said.
“Talking heads make noise. Cash is cash,” he added.
Not everyone agrees.
Former Fed Governor Robert Heller said the US is “very close to a recession,” pointing to the contraction in the first quarter and signs that there will be no growth in the second quarter. A recession is defined as two consecutive quarters of declines.
“We’re dangerously close to that as we’re looking at zero growth for the second quarter. The slightest negative impact will actually send us into a technical recession,” he told CNBC’s “Capital Connection” on Thursday.