The U.S. economy may be about to enter a strong economic period, putting an end to the profit recession in the S&P 500, Strategas Research Partners told clients Wednesday.
"When the economy falters temporarily, against the backdrop of reasonable growth, we call that a 'soft patch.' Today, we are seeing the opposite develop, ie, the U.S. looks to be entering a 'strong patch' of above-trend growth in 3Q [third quarter]," wrote Donald Rissmiller, chief research officer and economist at Strategas.
Although the pace of acceleration remains to be seen, Rissmiller explains that it would be "foolish" to undermine the pickup in economic activity, particularly in areas like industrial production and housing.
The strong patch that's emerged should alleviate investors' concerns about a potential recession, Rissmiller wrote. He points to four economic factors that would have to take place in order for a recession to occur.