US Economy Faces Potential Hard Landing as Tariff Volatility Persists
US Economy Faces Potential Hard Landing as Tariff Volatility Persists
0
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The US economy is teetering on the edge of a hard landing, with ongoing tariff disruptions continuing to shake the market, as noted in American Century Investments' latest forecast.
Despite some optimism, the challenges persist, keeping hopes for a softer economic transition at bay.
Richard Weiss, the Chief Investment Officer for American Century’s Multi-Asset Strategies, highlighted the weakening position of US equities, exacerbated by tariff tensions. Initial forecasts, made prior to tariff announcements, may require revisions to account for these extensive impacts as the year progresses.
Weiss noted that while cash returns are expected to outpace inflation, forecasts for longer bonds remain buoyant. The outlook for US equities, however, has been tempered, particularly with a forecasted decline in P/E multiples for large-cap stocks.
A decline in return estimates for US large-cap equities to 6.50% from last year's 7.25% indicates decreasing valuations. Conversely, projections for small-cap and non-US developed market equities appear more stable, promising superior returns relative to large and mid-sized US counterparts. Yet, US growth stocks could outshine others in terms of earnings growth.
The report also reveals that certain fixed-income categories remain largely unchanged from prior year predictions, though a slight drop in high yield and convertible bond returns is anticipated.
American Century's strategic plan incorporates six scenarios, ranging from soft to hard landings, technological impacts, policy shocks, climate change implications, to shifting demographics characterised by an aging population. These scenarios provide a framework for understanding potential market transformations over the next five years.
The expectation is for US large-cap growth stocks to undergo a correction in valuation multiples, although earnings are likely to stay robust. Meanwhile, small-cap stocks are slated to outpace large-cap value stocks in earnings without significant valuation shifts.
Weiss confirmed that despite the recent downturns in return expectations, these forecasts were prepared before the US imposed broad tariffs, impacting a wide array of imports. Such late developments have intensified concerns over possible economic stagnation or stagflation, as reflected in American Century’s detailed market scenarios.
In a significant leadership transition within Australia's banking sector, Nuno Matos, Chief Executive Officer of ANZ Group, has been appointed as the new chair of the Australian Banking Association (ABA) council. This appointment marks a pivotal moment for the ABA, an organisation that plays a central role in shaping industry policies, consumer protections, and regulatory frameworks across the nation's banking landscape. - read more
Loan Market Group's Asset Finance Exchange (AFX) has reported a remarkable achievement, settling approximately $80 million in its inaugural year. This milestone underscores the burgeoning growth of Australia's asset finance sector and highlights the platform's effectiveness in connecting brokers with asset finance specialists. - read more
Valiant Finance has reported a significant 20% increase in commercial finance settlements during the second quarter of 2025, highlighting a robust expansion in Australia's small and medium-sized enterprise (SME) lending landscape. This growth is predominantly driven by heightened activity in the healthcare, agriculture, and construction sectors, reflecting improved lender confidence and a resurgence in business investment across the nation. - read more
Managing your personal loan repayments is crucial to maintaining your financial health. Understanding the importance of staying on top of your loan can help you avoid late fees, reduce stress, and even improve your credit score. - read more
Financial harmony involves the smooth and balanced management of personal finances, where debts and savings are optimally aligned to achieve financial stability and peace of mind. - read more
Online loans have revolutionized the way Australians access finance. With the emergence of fintech and the convenience of the internet, obtaining a loan is now faster, easier, and often more customer-centric. When managed responsibly, the online loan application process empowers borrowers with quick funds for life's unexpected expenses or investments. However, the speed and simplicity of online transactions can also lead to common oversights. - read more
