Ron Temple on Bloomberg TV

Ronald Temple

August 14, 2023

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The Chinese economy is facing significant challenges, including declining consumer confidence, trouble in its real estate market, and high youth unemployment, Lazard Chief Market Strategist, Ron Temple, told Bloomberg News on August 14.

“It's less contagion risk that I'm focused on right now than just the absolute issues in China. Chinese consumer confidence bounced after the post-COVID lockdowns, but it has since fallen right back down to its all-time lows. And I think that's really driven by the real estate issues. If you look at the household sector in China, the single biggest asset for the vast majority is their house. In China, the house is the nest egg. And we've seen home prices going down for the last two years across most Chinese cities.”

In contrast, according to Ron, the US economy has shown resilience despite the Federal Reserve raising interest rates and shrinking their balance sheet. Inflation has decreased, and job creation remains strong. However, even if the US dodges a recession next year, slow growth is likely as the effects of tightening works through the economy.

“If you told me 18 months ago, the Fed would raise rates 525 basis points and shrink their balance sheet to $936 billion, I would have said, ‘Well, how bad is the recession?’ If you look at second quarter GDP growth of 2.4%, you see how resilient the economy has been.  ​​​​​​​

“I also think the Fed is successfully threading the needle. Inflation is down from 9.1% to 3.2%, and yet we're creating 258,000 jobs per month year to date, which is twice what we need given population growth. So, things are looking good. That said, even if we dodge a recession, people need to be a little more grounded and recognize we’re still going to have really slow growth.”

Click here to watch the full segment.