A Recession Is Coming… Eventually

Matthew 6:34

“Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.”

Towards the beginning of last year, Economists, “Markets Experts”, and Corporate CEOs have been predicting a recession for 2023.*  A lot of them said that it would happen in early 2023. The question wasn’t whether or not there would be a recession but whether or not it would be a “typical” recession or a shallow one.  This was easy to say since inflation made its way up to 9% last summer and the Fed was aggressively raising interest rates.  This also made it a very easy story to believe.

So now we’re halfway through 2023 and the same “Experts” that said a recession would happen early in the year are now changing their forecast to the end of the year.  Some are even saying that it won’t happen until 2024.  Recessions are a normal part of the economy so yes eventually they will be right.  As long as these forecasters keep pushing back the date of a recession, they won’t be wrong, just early. Doesn’t a prediction require you to be right on the event and the timing? 

Not All Recessions Are Equal

Recessions come in different sizes and shapes.  They last for varying amounts of time.  Some are long-lasting and deep (Global Financial Crisis) and some are short and shallow.  Others, like the 2020 COVID recession, are deep and very brief.  Most people didn’t even realize we were in one because it was the shortest one in history.**

Many investors believe that the markets will go down during a recession.  While this may be true, it is also true that may also go up.  Both have happened in the past.  IF someone could successfully predict a recession, we still have no idea what the markets will do in response.

A Greater Risk

While many investors focus on whether or not a recession is coming, I believe the greater risk is how we respond to the “predictions”.  Recessions don’t cause people to miss their financial goals but it’s how they react to the recession and “predictions of a recession that can have a positive or negative impact on their long-term financial success.

 “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.”  – Peter Lynch

*  https://www.cnbc.com/2022/12/23/why-everyone-thinks-a-recession-is-coming-in-2023.html 

** https://www.cnbc.com/2021/07/19/its-official-the-covid-recession-lasted-just-two-months-the-shortest-in-us-history.html

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