The Hidden Recession
As a naturally occurring stage of any economic cycle, recessions have long worried citizens since the industrial age. In recent years, several recessions, such as the Dot-Com bubble of 2001 and the Great Recession of 2008, have had deep impacts on not only the broader economy but millions of Americans’ financial livelihoods. These difficult years could inflict some long-term wariness into any hiccups the economy can have. A recent survey conducted by Nationwide found that out of 2,000 adults, 68% are expecting a recession in the next six months and 80% of those believe it to be as severe as the 2007 to 2009 Financial Crisis. Currently, the rallies of the stock, labor, and consumer markets have continued to push the economy in a battle towards disinflation, with several economic analysts warning the recession expected for the last two years has been further delayed. The current broad consensus seems to show a high chance of it beginning during the fourth quarter of this year or the first quarter of next year.
Although no one truly knows when the next recession will come and how deep it will be, the combination of the Federal Reserve’s actions to tighten rates and companies’ fiscal performances will lead the way to any negative ramifications. With hotter-than-expected labor data releasing last week, investors fear heightened hawkishness by the Federal Reserve could push rates high enough to trigger a recession. Although the Fed continues to reiterate its plan to reach 2% inflation by means of a “soft landing”, the unfamiliar variables spurring from the pandemic or even AI could present themselves as threats for the Fed’s vision. This week, the next batch of economic data will release in the form of the consumer and producer price reports to gauge inflation for the month of June.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
