Fidelity Viewpoints says key data suggests any slowdown is a ways off.
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Geopolitical, supply chain, and policy changes are increasing inflation and interest rates
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Economy is growing, in mid-cycle of the business phase when stock prices may rise despite volatility
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Strong GDP, consumer spending, low unemployment, and rising wages are likely to prevent recession in the short term
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History shows inverted yield curves forecast recession like autumn forecasts winter; one follows the other but nothing says when the snow will begin. Time between inversion and recession has ranged historically from 6 months to 4 years
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Recent media predictions reacted to the inversion between 2-year and 10-year Treasurys, but the best predictor of a near recession is the 3-month versus 10-year difference. This part of the curve is not signaling a recession.
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The business mid-cycle can last for years while the average recession is only 9 months
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Energy is not included in the CPI, but energy prices matter less to the economy now than in the 1970s
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Market corrections like this year are typical in mid-term election years and strong rallies often follow. Strong rallies are also common following uncertainty about interest rates and other policies. Stocks have returned almost 10% in the following year previous curve inversions.
https://www.fidelity.com/learning-center/trading-investing/u…
BLancaster