{"id":12539,"date":"2023-07-06T21:28:26","date_gmt":"2023-07-06T21:28:26","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12539"},"modified":"2023-07-06T21:28:26","modified_gmt":"2023-07-06T21:28:26","slug":"are-we-heading-for-a-recession-or-not","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/are-we-heading-for-a-recession-or-not\/","title":{"rendered":"Are We Heading for a Recession or Not?"},"content":{"rendered":"\n<p><em>Chelsea C. from Lexington, KY asks: <\/em>Hi Mitch, my question is about a recession in the U.S. I\u2019ve been hearing calls for a recession for over a year now, and it still hasn\u2019t arrived. What\u2019s the deal? Has everyone just been dead wrong, or is it just a matter of time now? Thank you for your time.<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thanks for writing! In my columns to date, I\u2019ve also hinted at the probability of recession, which the U.S. economy has continued to defy. There is still not a sure answer to your question, but I do think from an investment and equity markets standpoint, stocks have already priced in weakness at least from the standpoint of falling corporate earnings \u2013 which we think is close to running its course.<\/p>\n\n\n\n<p>In short, the U.S. economy may, or may not, enter a recession later this year or early next. But it also may not matter to the stock market. As long as any economic downturn is in line with or better than expectations \u2013 and not worse \u2013 then I do not see a big negative surprise in the cards for stocks.<sup>1<\/sup><\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_07_06_2023&amp;content=recession_is_coming\">How to Prepare for a Recession<\/a><\/u><\/strong><\/p>\n\n\n\n<p>What will happen to your investments if a recession occurs? A recession can impact investors in many ways, but with foresight and planning, you may be able to avoid some of the damage a recession can cause.<\/p>\n\n\n\n<p>To help you plan for what\u2019s ahead, we are offering our recession guide, to help you understand the following \u2013<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Recession signals and indicators<strong><em><\/em><\/strong><\/li>\n\n\n\n<li>How recessions work<strong><em><\/em><\/strong><\/li>\n\n\n\n<li>How long recessions last<strong><em><\/em><\/strong><\/li>\n\n\n\n<li>How to potentially protect yourself and your family from long-term damage<strong><em><\/em><\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong><u><br><\/u><\/strong>If you have $500,000 or more to invest, get our free guide. You\u2019ll learn the scope and impact of recessions, and get our viewpoint on the most important moves you can make to weather a potential one. Don\u2019t wait\u2014get this guide today!<br>\u00a0<br><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_07_06_2023&amp;content=recession_is_coming\">Download Your Copy Today:\u00a0<em>A Recession is Coming: 6 Insights to Know You\u2019re Prepared<\/em><\/a><\/u><\/strong><em><strong><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_07_06_2023&amp;content=recession_is_coming\"><u><sup>2<\/sup><\/u><\/a><\/strong><\/em><\/p>\n\n\n\n<p>You mention hearing calls for a recession for over a year now, which is another reason I doubt we\u2019ll see much stock market impact. This \u2018looming downturn\u2019 has arguably been one of the most anticipated recessions in modern history. Indeed, at the end of last year, 43.5% of surveyed economists (as per Federal Reserve Bank of Philadelphia) expected a recession sometime in 2023, the highest percentage on record dating back more than 50 years.<\/p>\n\n\n\n<p>Economists have been changing their minds of late. As of June 30, the percentage of those expecting a recession in the next 12 months dropped to 31.75%. As you can see in the chart below, an increasing number of forecasts have shifted to flat or very modest growth in 2023:<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"550\" height=\"519\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic107062023resized.png\" alt=\"\" class=\"wp-image-12541\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic107062023resized.png 550w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic107062023resized-300x283.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/figure>\n\n\n\n<p><strong><em>Source: Federal Reserve Bank of Philadelphia<sup>3<\/sup><\/em><\/strong><\/p>\n\n\n\n<p>There have been a few reasons the U.S. economy continues to chug along. The first is the labor market, which has been less sensitive to interest rate increases than just about everyone thought. While there have been waves of layoffs in the technology sector and among a few select white-collar jobs in the \u2018knowledge economy,\u2019 the overall jobs market remains one where job openings far outstrip the number of Americans looking for work. The unemployment rate remains below 4%.<\/p>\n\n\n\n<p>Another key driver keeping the U.S. economy, and specifically the U.S. consumer, afloat has been falling energy prices. The war in Ukraine led to a spike globally in oil and natural gas prices, which placed pressure on producers and consumers alike. Had those high prices been sustained, eventually the effects of inflation would have substantially dented production and spending. But those high prices turned out to be fleeting.<\/p>\n\n\n\n<p>Looking out from here, there is still a strong recession signal being sent by one of the most reliable leading indicators available: the yield curve. As seen on the chart below, a yield curve inversion (circled in red) has preceded each of the last few recessions. In fact, since 1966, an inverted yield curve has preceded all eight recessions that have taken place.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"350\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic207062023-1024x350.png\" alt=\"\" class=\"wp-image-12542\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic207062023-1024x350.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic207062023-300x102.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic207062023-768x262.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/07\/pic207062023.png 1318w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p><strong><em>Source: Federal Reserve Bank of St. Louis<sup>4<\/sup><\/em><\/strong><\/p>\n\n\n\n<p>It seems improbable, in my view, that the U.S. would be able to elude a modest downturn with these lending conditions in place. But then again, the jobs market and consumer spending strength may continue to surprise us.<\/p>\n\n\n\n<p>There is no way to know exactly when or if a recession will occur, but you can prepare for one.<\/p>\n\n\n\n<p>It\u2019s important to understand how recessions work, how long they last, and how to potentially protect yourself and your family from long-term damage to your assets and security. We can help you with our free guide, <em><strong><a href=\"https:\/\/go.steadyinvestor.com\/recession-is-coming-guide?source=zim&amp;medium=blog&amp;term=mitchsmailbox_recession_is_coming_zim_07_06_2023&amp;content=recession_is_coming\">A Recession is Coming: 6 Insights to Know Now So You\u2019re Prepared<\/a><\/strong><\/em>.<sup>5<\/sup><\/p>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide today. You\u2019ll learn the scope and impact of recessions, and get our viewpoint on the most important moves you can make to weather this one. Don\u2019t wait\u2014get this guide today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Financial gurus have been predicting a recession for more than a year. Mitch looks at whether a recession will arrive\u2014and whether it matters to the market. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-12539","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12539"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12539\/revisions"}],"predecessor-version":[{"id":12544,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12539\/revisions\/12544"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}