Buy U.S. Stocks on the Dip? Macro Strategists Say "Not Recommended": Recession Risks Still Loom!

The tariff policy announced by US President Trump at the beginning of this month dealt a heavy blow to US stocks, with the S&P 500 index falling 13% from its mid-February peak. At this point, the prices of many US stocks have already tempted numerous investors, who are eager to engage in a wave of bargain hunting.

In response, Daniel von Ahlen, a senior macro strategist at data and analytics firm GlobalData TS Lombard, warned, "It's not yet time to buy."

In a report on Wednesday, April 16, von Ahlen wrote that investors' concerns about Trump's tariff policy are insufficient, as they "severely underestimated" the impending recession risk.

He pointed out, "Trump's tariff suspension order triggered a rebound in the stock market, but we believe it will be short-lived. We recommend selling during the rebound, not buying during the decline."

He also stated that the current consensus expectation for US GDP growth this year is 1.8%, which he considers "too high." He believes that the economic downturn caused by tariffs cannot support such growth, as rising prices will suppress consumers' purchasing power.

It's not just tariffs.

Regarding the outlook for the US economy, von Ahlen also highlighted other potential concerns beyond tariffs. First, the Department of Government Efficiency (DOGE) office is cutting federal government spending, which will negatively impact the labour market and lead to a decline in corporate profits.

GlobalData's report noted that if the Trump administration wants to pass a tax cut bill, the government will have to offset it by cutting more spending, which will further pressure the economy.

Second, due to the "widespread uncertainty" of Trump's economic policies, corporate investment spending and hiring intentions may slow down.

Additionally, Trump's crackdown on immigration could lead to a decline in US labour force growth, putting pressure on the US economic recovery and job growth.

In the report, von Ahlen wrote, "Overall, these factors may be enough to push the US economy into a recession, especially as real personal income growth cools rapidly, leaving little room for error."

He also pointed out that while the stock market is never a barometer of the economy, they are closely related, and severe volatility could eventually become a problem affecting the economy. This is because rising asset values encourage consumers to be more confident and spend more, while a sluggish stock market may suppress "animal spirits."