Does a Recession Loom?

The US economy is experiencing one of it's longest economic expansions on record, having grown since the middle of 2009. Only 2% of investors expect a recession in 2018 according to the latest Bank of America’s Merrill Lynch Global Fund Manager Survey.

As for when a recession is actually expected, over 30% of those surveyed expect it to occur in the latter half of 2019 and 25% expect it in 2020.

Michael Hartnett of Bank of America Merril Lynch interprets the data as a positive sign for markets:

"Although cash levels remain high and growth optimism is at the lowest level in over two years, a majority of investors say there is room to grow in this equity bull market and don’t see signs of recession anytime soon. Fund managers think the May rally can extend in the near-term"

Over 50% of economists surveyed don't expect a recession until 2020.

But is a recession more likely than most anticipate?

The US treasuries yield curve is one indicator that has predicted recessions fairly accurately in the past. Figures from Oxford Economics indicate that the odds of recession are currently at 10%. This is less than the 30% that is usually seen before recessions. Lev Borodovsky of the Wall Street Journal's Daily Shot newsletter comments that:

"While the flattening Treasury curve is not yet forecasting a recession, some economists are becoming concerned about the trend."

What would a recession mean for markets?

Stock market prices, profits and revenues fall in recessions. However, investors seem to suffer more before a recession than during it according to research from Richardson GMP.

The six month period immediately before the recession is the period in which investors feel the greatest pain.

Westminster Wealth Management can assist in helping you to navigate your financial future, and expert advice is valuable in complicated times just as much as in simple ones. Contact us today.

The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.

Past performance is not a reliable indicator of future performance.