Nuveen CIO Saira Malik joins Catalysts to give an overview of the current state of the economy and discuss whether the US is headed toward a recession.

Malik points to two areas where she's the most concerned: the consumer and the jobs market. She points to weak retail sales data alongside mixed employment numbers and emphasizes that unemployment claims are almost at cycle highs.

"I think consumer and employment goes together. When you feel secure in your job, you tend to spend more. We're seeing both of those start to break down. My view is that a recession is a when, not an if," she explains.

She believes that the US is "slowly approaching" a recession, most likely between the fourth quarter of this year and the first quarter of 2025. She explains, "the resilience of this economy in the face of higher interest rates and inflation has been surprising... I think consumers are showing more signs of slowing than the employment market, and that slow decline will be eventually what takes us into that recession." She notes that even if the Federal Reserve cuts interest rates, it won't be enough to "stave off any form of a recession."

Malik states that the Fed is in a "tough spot" as it balances the right time to cut without reaccelerating inflation. She does not believe that the US will reach the Fed's 2% inflation target in 2024, but there is a chance it will in 2025. She adds: "I think the consensus view that somehow we get through this period of high rates, high inflation, and we just have this beautiful soft landing is kind of a tough one. The markets (^DJI, ^IXIC, ^GSPC) are pricing that in. That's where I think the challenge is..."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl