The risk of the U.S. economy falling into recession is low, Sonders said. She noted that Cornerstone Marco's well-respected recession model points to a 34 percent probability of the recession. "The risk of recession is never zero; there is something awry in the economy," Sonders said.
Some naysayers can point to an earnings recession among large U.S. companies as a sign of worse things to come. "The earnings recession is not an economic recession," Sonders said. A strong U.S. dollar and a crash in oil prices caused the earnings drop, and Sonders said those problems have passed.
The presidential election may supply some of that drama. Stock market performance tends to be weaker in election years when an incumbent isn't running, Sonders said, but "trying to forecast short-term market action around this election is a fool's game."
Historically, stocks have performed better in slow tightening cycles as opposed to fast cycles, where the Fed raises rates at every meeting after the initial rate increase. "If the Fed is moving slowly, it means that they are not chasing an overheated economy or an inflation problem," Sonders said.
Leading economic indicators from the Conference Board point to minor stress in the U.S. economy, but not another recession. These indicators have not surpassed their highs from the last economic expansion, Sonders said, and recessions happen when there are excesses in the economy, such as high inflation or surplus inventories.