The US economy is much stronger than people think and there are “no signs yet” of an imminent slowdown or recession, says prominent investor Kevin O’Leary.
“I’m not saying we won’t get any, but anyone who says it’s coming around the corner next week is just plain wrong,” he told CNBC’s Squawk Box Asia on Thursday.
“There’s no data, there’s no evidence, there’s no numbers, there’s no consumer propensity to slow down yet,” he said.
The chairman of O’Shares ETFs said he’s invested in a variety of sectors, from commercial kitchens and wireless charging to fitness equipment and greeting cards. And he has seen “no hint” of a recession.
“I see her teardrops every week. We’re not seeing any slowdown yet,” he said, referring to a document that summarizes key information about a company. “I think I’ll be one of the first to see it.
He said consumption is still going well at the moment.
US GDP fell 1.5% in the first quarter of the year despite strong consumer spending, reflecting weakness in business and private investment.
Difficult choice
There are two reasons it’s hard to predict a recession, O’Leary said.
The first is that $4.5 trillion has been added to the US economy “from a helicopter into the hands of consumers and businesses across the country” in recent years.
That’s an unprecedented amount of money being pumped into the system, he said.
“I look at numbers every week on what consumers are buying with the money they have, they’ve gotten so much of it over the past three years, and I’m not in the camp of saying a dramatic recession,” he added .
I don’t think we’re in a bad recession yet. Not yet.
Kevin O’Leary
Chairman of O’Shares ETFs
Second, technology has increased productivity.
The direct-to-consumer model is now being used in all sectors of the economy, which means higher gross margins and more customer data for companies. It’s far more efficient and productive, O’Leary said.
“Those who are genuinely saying we’re going to get a massive recession could be wrong and miss out on returns as this market slowly pulls back,” he said.
Soft landing
“I tend towards a soft landing with my investment strategy,” said the “Shark Tank” investor.
He said everyone thinks the central bank is out of control, but he believes Fed Chair Jerome Powell is in “pretty good shape” and is trying to balance inflation and employment.
Even if there are signs of a slowdown or a recession, that risk seems already baked into stock prices given the large corrections in many indices, O’Leary pointed out.
“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.”
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The economy will eventually slow down, but he said he hasn’t seen it yet.
“I trust numbers, not talking heads. I get talking heads all day 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 interests me,” he said.
“Talking heads make noise. Cash is cash,” he added.
Not everyone agrees.
Former Fed Governor Robert Heller said the US was “very close to recession,” noting contraction in the first quarter and signs that there would be no growth in the second quarter. A recession is defined as two consecutive quarters of declines.
“We’re dangerously close because we expect zero growth for the second quarter. The slightest negative impact will actually push us into a tech recession,” he told CNBC’s Capital Connection on Thursday.