Top Economist Challenges Wall Street Consensus: U.S. Economy Accelerating Despite Job Losses, Government Shutdown

The U.S. economy is not merely resilient; it’s accelerating, a top Wall Street voice declared, directly challenging widespread pessimism among economists. Torsten Sløk, chief economist at Apollo Global Management, issued a blunt assessment on Wednesday, asserting that forecasts of an imminent slowdown have been consistently wrong, prompting a call for the economics profession to re-evaluate its track record.

Sløk’s remarks, circulated to clients, highlighted that the consensus has wrongly predicted an economic deceleration for nine consecutive months. “But the reality is that it has simply not happened,” Sløk stated, urging peers to “look ourselves in the mirror.” This comes as second-quarter GDP expanded at a robust 3.8% annualized rate, with the Atlanta Fed’s GDPNow model projecting an even stronger 3.9% gain for the third quarter. This growth defies expectations of a slowdown from high interest rates and tighter credit.

The resilience extends to consumer spending and business investment, particularly in AI, energy infrastructure, and manufacturing. While Sløk acknowledged slowing job growth, he attributed it to reduced immigration, not economic weakness. He emphasized that it’s increasingly difficult to argue for delayed negative effects from the “Liberation Day” market shock and tariffs six months prior.

However, recent data presents a more complex picture for the labor market. On Wednesday, the private payrolls report from ADP showed unexpected job losses for September and a negative revision for August. This news coincided with another federal government shutdown, the third under President Trump, further complicating the economic outlook. Bill Adams, chief economist for Comerica Bank, noted the ADP report’s increased significance given the delay in government jobs data due to the shutdown.

This mixed data contrasts with Morgan Stanley’s Mike Wilson’s “rolling recovery” thesis, suggesting the economy has been quietly moving through recession-like conditions since 2022, now transitioning to recovery. Wilson believes the economy bottomed last spring, coinciding with the “Liberation Day” crackdown on tariffs. Despite a buoyant stock market, the labor market appears to be lagging, reflecting Federal Reserve Chair Jerome Powell’s “low-hire, low-fire” environment.

For investors, Sløk’s outlook carries significant implications. If growth continues to strengthen, inflation risks could rise, especially if the Federal Reserve continues its recent path of rate cuts. The central bank implemented its first rate reduction in years in September, with markets pricing in further cuts. Sløk, who on September 30th argued the economy was strong and inflation high, warns that continued easing could rekindle price pressures. He sharply criticized the forecasting community for undermining its credibility by repeatedly predicting weakness that has yet to materialize.

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