The US economy is much stronger than people think, and there is “no evidence” of an impending downturn or recession yet, says celebrity investor Kevin O’Leary.
““I’m not saying we will not get one, but anyone who says it’s around the corner next week is simply 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 tendency for the consumer to slow down yet,”[ads1]; he said.
The chairman of O’Shares ETFs said he has invested in a wide range of sectors, from commercial kitchens and wireless charging to exercise equipment and greeting cards. And he has not seen “any indication” of a recession.
“I see their tears every week. We see no decline 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. I’m kind of a canary in the coal mine that way.”
He said that consumption is still going well at the moment.
US GDP fell by 1.5% in the first quarter of the year despite strong consumer spending due to weak business 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 was added to the U.S. economy in recent years “from a helicopter, in the hands of consumers and businesses across the country.”
It is a unique amount of money that is pumped into the system, he said.
“I think about numbers every week, what the consumer buys with the money they have, they have received so much of it in the last three years, and I am not in the camp that says a dramatic recession,” he added. .
Second, technology has increased productivity.
The direct-to-consumer model is now 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 really say we are going to have a massive recession may be wrong and lack returns as this market slowly climbs back,” he said.
“I’m wrong on the side of a soft landing when it comes to my investment strategy,” said the “Shark Tank” investor.
He said everyone thinks the central bank is out of control, but he is of the opinion that Fed leader Jerome Powell is in “pretty good shape” and trying to balance inflation and employment.
Although there are signs of a decline or recession, that risk already appears to be 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 it, does not look at the data,” he said, adding that some private companies he has invested in have had “spectacular quarters.”
The economy will slow down at some point, but he said he has not seen it yet.
“I trust 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 do not lie. Cash flow does not 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 was “very close to a recession”, pointing to the downturn 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 decline.
“We are dangerously close to that because we are looking at zero growth for the second quarter. The slightest negative impact will actually tip us into a technical recession,” he told CNBC’s “Capital Connection” on Thursday.