Former U.S. Treasury Secretary Lawrence Summers thinks there’s an almost 50% that the U.S. will enter into a recession this year. He believes this is because of changes made by the Trump administration and uncertainty in the markets. Indeed, Summers says that the U.S. has a big problem with uncertainty, and it won’t be easy to fix. This uncertainty is making it hard for businesses to make decisions and for consumers to feel confident about spending money.
Summers points to some specific reasons why he thinks a recession might happen. These include new immigration rules, government layoffs, and tariffs on imported goods. Unsurprisingly, the Trump administration thinks the economy will be okay and that any short-term problems will be followed by growth. However, Summers disagrees, and said that the administration’s policies will ultimately hurt the economy. He also thinks that the Fed’s efforts to cut interest rates might not be enough to help the economy grow.
Interestingly, Summers pointed to Latin America’s economic history as an example of how protectionist policies can go wrong. He says that while protectionism might seem like a good idea in the short term, it usually ends up hurting the economy in the long term. Summers also thinks that businesses are too uncertain about what will happen next to invest in new projects or hire new employees, which will make it hard for the economy to grow.
Is SPY a Buy Right Now?
Overall, analysts have a Moderate Buy consensus rating on the SPDR S&P 500 ETF Trust (SPY) based on 415 Buys, 84 Holds, and six Sells assigned in the past three months, as indicated by the graphic below. After a 10% rally in its share price over the past year, the average SPY price target of $710.68 per share implies 27.8% upside potential.
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