Introduction
We took most of 2020 off from publishing our quarterly recession dashboard. Why? Because the economic shutdown we saw last year made this “traditional” economic data less useful. In the interim, we followed high frequency data which gave us a clearer picture of how quickly the economy was re-opening. Starting earlier this summer, we thought it would be appropriate to start sharing our recession dashboard again.
What is a Recession?
A recession (i.e. defined as two consecutive quarters of negative GDP growth) is coming. We guarantee it. Unfortunately, we do not know when. It is kind of like saying we know another hurricane will hit Houston. We know this event will happen, but we just do not know when. Recessions will continue to happen as long as economic data is tracked with some degree of certainty. With that being said, the better question to ask could be, “What can help us identify the next looming recession?”
The Price Group Recession Dashboard
A Look Back At 2008
We do not think the next recession will be as severe as the recession of 2008 – 2009, but it is easy to understand why some fear just that. Humans tend to think in linear fashion – whatever has happened most recently will continue to happen in the same way moving forward. This same logic applies to hurricanes… Houston is fearful that every hurricane will be just like Hurricane Harvey.
Take Away
We remain vigilant in our study and due diligence to track economic activity and to make changes as needed to protect client capital. We remain of the opinion that a recession is not imminent. To be clear, we are not saying stocks will go up in the coming weeks or months. Corrections happen. But, given the level of corporate profits, low interest rates, government fiscal policy, and our outlook for economic growth, we think that equities will move higher over the next 12 months.
About the Author
Matt Price serves as a Partner and Senior Vice President for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their three children and the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 10 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes that everyone needs a wealth coach!
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Any opinions are those of the author and not necessarily those of Raymond James. 3875919