U.S. recession risks have been a headline over the last few weeks as the markets sold off.
“Goldman Sachs and Moody’s Analytics in recent days joined forecasters raising alarm about the increased likelihood of an economic downturn. The warnings coincided with a market plunge touched off by U.S. tariffs against Canada, Mexico, and China, some of which were delayed. Retaliatory tariffs issued by China on Monday deepened a trade war between the world’s two largest economies.” – ABC News
That concern is interesting as there was no such concern in January.
“As of January, the risk of a U.S. recession was considered small. A low unemployment rate and rising wages meant consumers were continuing to spend, inflation was drifting down towards the Federal Reserve’s 2% target, and the U.S. central bank had cut interest rates by a full percentage point since September. Fed officials considered it a stable foundation for continued growth, and many economists thought the central bank had nailed a “soft landing” from the high inflation of 2021 and 2022.” – Reuters.
Over the last couple of weeks, the market sell-off eclipsed 10% on an intraday basis, sending investor sentiment plummeting to levels usually seen during more significant declines and previous bear markets. While the markets have had a phenomenal run over the past two years, investors seemed to have forgotten that markets tend to correct now and then.
The one thing you can always count on during a sell-off is the media trying to formulate a headline to rationalize investor actions. During this particular decline, it was the return of a U.S. recession.
Hellbound and Down 