Episode summary
Will There be a U.S. Recession in 2026?
Zacks Market Edge
· · 42 min · Hosts: Tracey Ryniec, Mark Zinski, Neena Mishra, Ethan Feller
Summary
The host and a guest argued that the latest U.S. jobs data and weak monthly spending signals point to a fragile economy, but not yet a formal recession. The guest said payroll growth has averaged only 25,000 to 30,000 a month for more than a year, which leaves the economy in a “netherworld” of stagnant growth rather than outright contraction. He also pointed to flat-to-negative July CPI month-over-month readings and stressed that the weakness is broad even if headline inflation remains sticky.
The discussion turned to the Fed, with the guest arguing that rate changes will not solve supply-driven inflation tied to oil, tariffs, or shipping bottlenecks. He said long-term rates are already reflecting those risks and that the central bank cannot fix them by cutting or hiking. On labor, he said the headline unemployment rate understates weakness because the household survey, gig work, and falling participation suggest a softer underlying job market.
They also spent much of the episode on AI-linked spending. The host highlighted companies such as Arrow Electronics, MKS Instruments, and Solve Energy as beneficiaries of data-center and power buildouts, while the guest argued that the AI capex boom has produced narrow earnings strength without a broad productivity payoff. He said the market is closer to the top of the AI trade than the beginning, though he still expects some stocks outside the megacaps to benefit from rotation.
Key takeaways
- The guest said U.S. payroll growth of 25,000 to 30,000 a month is weak but still short of his recession threshold.
- The guest argued the Fed cannot cure oil- and tariff-driven inflation with rate cuts or hikes.
- The host and guest said the AI boom is showing up in infrastructure names like Arrow Electronics (ARW), MKS Instruments (MKSI), and Solve Energy (MWH).
- The guest said AI spending has not yet produced broad productivity gains across the U.S. economy.
- The guest expects a rotation out of crowded AI winners and into other parts of the market if long-term rates stay elevated.
Notable quotes
“we are not growing, um but we are not in a recession. Um and I just did this morning, you know, the 1.5% second quarter growth rate”
“there's there's a four or five sectors, you know, computers, mathematics, uh some financial services, you know, numerate software dependent groups are are are, you know, gaining some traction in their use of AI”
“My focus would not be on AI. I I mean, I I own some of these software, you know, companies that got beat up and did really well when they bounced back”
How the episode opens
Stocks, bonds, ETFs. Straight out of downtown Chicago, this is Zacks Market Edge.
Welcome to Zacks Market Edge, the podcast about investing in your life. I'm your host, Tracy Ryniec, and this week I actually have a guest. I'm not going solo, and I'm joined by Zacks Chief Equity Strategist, John Blank, to talk about our usual favorite topic, are we in a recession?
Is recession coming? What is happening with the economy? And I invited John to come on this week because we've got some nasty job numbers that came in.
We went negative on jobs, and those of you who have listened in on the years we've done this podcast, it's been many years now, know that jobs are a key indicator for a recession. So, this is it. This is a key time to have John join us.
So, welcome, John.
Thanks, Tracy. Should be a good good very good discussion because uh we have entered some interesting data.
Right? Um I think people should know that as soon as we got the July job numbers in, and it was a negative 23,000, I did uh email John, and I was like, "It's negative, you know, this this usually means something bad. And we had a revision down in the prior months.
The job scene does not look good. If we didn't have all this spending with AI, I would think we were in or heading towards a recession, perhaps. So, that's why I invited him to come on because this is kind of seems like a key inflection point.
So, John, let us know. Let us know what is happening with the jobs. They were much weaker, especially in those revisions, than I think most people thought we would see, and obviously they were for July well under the estimate of 80,000.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- u.s. recession outlook
- 2026 economy
- macroeconomic risk
- growth slowdown
Watch the episode
Watch “Will There be a U.S. Recession in 2026?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Zacks Market Edge
Zacks Market Edge, this episode and its artwork belong to Zacks Investment Research. Octagon is not affiliated with the show; this page is an independent summary.
