Credit Suisse Executive Says Wall Street ‘Way Too Optimistic’ About Economy: Don’t Expect Recovery Until 2022


Wall Street analysts are underestimating how long it will take for the economy to recover from the effect of this year’s shutdown, a top equity strategist said on Tuesday.

“Historically, it takes about 10 quarters to get profits back to where they were at the peak” after a recession, Jonathan Golab, a managing director and chief U.S. equity strategist for Credit Suisse, said in an interview on CNBC’s Squawk Box. “That’s two and a half years. If you look at this environment, it’s substantially worse than what a typical recession would look like. And yet the consensus estimates from Wall Street analysts have us getting back to peak earnings by the third quarter of 2021. It just doesn’t make sense. It’s just way too optimistic.”

Golab added that companies shouldn’t expect to recover until 2022 and that it would take the stock market even longer.

“If it takes us until 2022 before we get back to peak on the earnings, then the stock market is going to take a longer period of time to get back to that level,” Golab said. “When the market has been selling off, the defensive shares and tech have been winning. But when the market is pushing ahead, those companies are not losing. They’re kind of staying in line with the market. It’s as if the investors are getting back in, but they’re doing it without enthusiasm. It’s almost like they’re wearing water wings or something when they’re getting back in the market. And that, to me, is a sign that this thing is not going to hold.”

Kevin Hassett, a White House economic adviser, told Squawk Box on Monday that officials are anticipating double-digit negative growth in the gross domestic product over the next several months. “You’re looking at something like minus 20 percent to minus 30 percent in the second quarter,” Hassett said. First-quarter numbers, which are likely to reflect just a fraction of the losses, are due to be released Wednesday.

The U.S. economy has lost more than 26 million jobs since coronavirus-related shutdowns began in March, three times the number lost during the Great Recession of 2007-09.

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