BNP Paribas Wealth Management US growth concerns and the attractions of infrastructure
May 21, 2025
Explore the intriguing disconnect between a strong US stock market rebound and looming fears of economic slowdown. While consumer confidence dips, hard data still suggests solid growth. Falling energy prices help cushion inflation, but higher tariffs loom. Infrastructure investments are on the rise, particularly in clean energy and water sectors, showcasing impressive gains in Europe. Insights into Germany's defense spending illuminate the broader implications for reconstruction and the economic landscape, making infrastructure a standout asset class this year.
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US Market vs. Economic Reality
- The US stock market rebounded 20% despite risks of slowing economic growth.
- There is a disconnect between market optimism and weak survey data signaling potential economic slowdown.
Mixed Signals on US Growth
- Surveys show weak consumer and business confidence, suggesting slower US growth ahead.
- Yet, retail sales and Atlanta Fed GDPNow indicate solid growth around 2.5% in Q2.
Energy Prices Buffer Inflation
- Falling energy prices, like US gasoline down 16% year-on-year, help contain inflation.
- Lower energy costs offset tariff-driven inflation risks and support growth in US and Europe.