Episode summary
Will There Be a Recession in 2026?
Zacks Market Edge
· · Hosts: Tracey Ryniec, John Blank
Summary
The host and a guest argued that the U.S. economy still does not look like a recession in the near term, even though the labor market is softening in some areas and inflation risks are building. The guest said breakeven payroll growth may fall toward zero later in 2026 because immigration and birth-rate trends have reduced labor-force growth, while weekly claims remain far too low to signal a recession. He framed the bigger risk as a stagflationary mix of higher oil prices, tariff pressure, and heavier government and corporate spending.
A major theme was the gap between the real economy and market pricing. The guest questioned the durability of the AI boom, arguing that much of the capex story is being driven by balance-sheet spending, debt, and inflated headline numbers, while the consumer remains weak. He cited Q2 earnings growth of 20% year over year as hard to reconcile with the broader economy and warned that estimates can be cut quickly if conditions change.
On investing, the host and guest leaned toward selective exposure rather than chasing momentum. The host favored oil, some metals, and utilities, while the guest said momentum names can keep running but that value investors should be cautious. They discussed Exxon Mobil, AES, Berkshire Hathaway, Travelers, and American Express as examples of different ways to play or avoid the current market split.
Key takeaways
- The guest said breakeven payroll growth could fall to zero later in 2026 as immigration and birth rates depress labor-force growth.
- The guest argued weekly jobless claims around 189,000 are far from recessionary levels and do not confirm an imminent downturn.
- The guest said inflation could worsen if the Iran-related oil shock persists, with core PCE potentially rising toward 3.7% to 4%.
- The guest questioned whether the reported AI spending boom is as large as advertised, pointing to a survey estimate of $280 billion versus much bigger market expectations.
- The host favored oil producers and utilities as steadier ways to benefit from higher prices and power demand, while the guest warned that momentum stocks can reverse fast.
Notable quotes
“the break even is actually zero that later in 2026 we will get to a zero break even”
“the employment mandate may be totally able to be overlooked, but the price stability mandate, the inflation mandate is screaming”
“you know these chips are so There's some oligopoly now”
“Energy as a trade with low pees and high cash flows for the next six months is going to make money”
How the episode opens
Stocks, bonds, ETFs, straight out of downtown Chicago. This is Zach's Market Edge. Welcome to Zach's Market Edge, the podcast about investing in your life.
I'm your host, Tracy Reinck, and this week I'm joined by Zach's chief equity strategist, John Blank, to talk about everything everything that's going on out there. The economy, are we going into a recession? Uh will we um sometime this year?
What's going on with these fantastic earnings reports? The AI revolution appears to be ongoing. The Iran war and oil.
There's just a lot going on. So, welcome back, John.
Thanks, Tracy. It's It's time for us to do this again. — Yeah. Uh so, it's been a while since I've had you on, and a lot has happened. We usually do these podcasts, you know, are are we in a recession? Are we going into one? So, let's just start off there again on this episode. And it's it's a little bit um more dicey this time, I feel, because the job market is still not good. It's it's not good.
Yeah. The only only thing I would add to that statement you made that I was on the a call with the Atlanta Fed as you know I work for the Atlanta Fed on the side and they did an exclusive call with the people who work on that survey for them the business uncertainty survey and the the economist there spoke to the idea that the break even non-farm payroll number was 150 like you and I spoke to two years ago but with the immigration crackdown Um it is now guessed that the the the break even is actually zero that later in 2026 we will get to a zero break even because you know we're losing if you do 150 * 12 that's 1.8 million people a year that's roughly how many people they think are being iced out by ice and that is taking the break even down.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us economy
- recession 2026
- stock picking
- market outlook
Watch the episode
Watch “Will There Be a Recession in 2026?” on YouTube
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