Recession In Late 2023

Investment Analysis Clubs Millionaire Fools
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No one can predict when a Recession will happen. Do any Fool Members have a percentage that we may be in Recession in late 2023 to 2024.

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I am only 50% being funny here. Maybe more than that. But this is serious. To wit:

Scenario #A: A “Sort of”/“kind-o’-like-a” recession. e.g. It will be right at the limits of recession measuring. Some will insist, and tend to pettifog the issue with: SEE! Technically it’s a recession! I told you so!" Others, with good justification, will say: “Weeeeell, it’s ‘technically’ in recession territory but just barely and few people if any are really hurting.” Maybe 40% give or take

Scenario #B: A real, No-“S’, hurtin’, why doesn’t the government DOOO something” recession? Only slightly above theoretical zero.

I do not see any significant setback out there. They’ve been talking (crying) about it for like two years now. Lo Dónde está? And things just keep getting better and stronger. We have all this inflation. Was supposed to bury us. Didn’t. Hasn’t. People seem to be adapting. And it’s retreating. Unemployment, despite all the stories of layoffs, cutbacks, closing, blabbitty, blabbitty … it’s still "El-owe-double-U, and like inflation, doesn’t seem to be getting worse.

What the heck kind of recession can you have with low unemployment, and improving inflation? Sounds like a disease with no symptoms and a zero mortality rate.

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While I am also skeptical of a recession occurring with the currently very low unemployment rate and inflation dropping, especially considering that even as the unemployment rate has remained low, the labor force participation rate has been increasing to a rate that’s pretty close to pre-pandemic rates Civilian labor force participation rate (bls.gov), I will point out that a decline in the M2 money supply is signaling a potential recession U.S. Money Supply Is Doing Something It Hasn’t Done in 90 Years, and It May Signal a Big Move for Stocks (msn.com) That said, I will point out that the options for where you can keep your accessible money are significantly different than they were 90 years ago, so I’m not sure that the M2 money supply is as relevant as it was then.

AJ

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Recession vs stock market. Two different things. Not Zack and Cody. More like Patty and Kathy or Chip and Ernie. Also, the recession you (or that article, really) suggest is more along the lines of the 40-50% chance of a de jure recession not causing significant pain. So, I guess we’re both right. In a recession like that I’m not sure the stock market would react any more than a 10-12% correction. Just enough to scare people but holding on tight would likely be the best move.

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They call it a “slow-cession”. The effects on the average person are minimal, even invisible. The macro effects are that the economy doesn’t grow for a quarter or two (the technical definition of a recession) but that employment stays pretty low. The largest sectors, like home building and automotive take a small hit, but otherwise things are pretty much status quo.

That’s “how”, I don’t know that it will come to pass that way. Once the roller coaster crests the top it’s hard to stop the momentum (although it does happen, every time, eventually.)

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While the article was focused on stock market impacts, it actually projected a recession, not just the stock market impacts, based on 3 indicators:

As I said, given the current labor market, I am skeptical that there will be a recession. But I was just trying to give a contrasting viewpoint.

**In looking at the recession ‘predictor’ data vs. when recessions actually occur, it appears that in most cases, the recession had already started when the ‘predictor’ hit the peak, so it’s not clear to me that the ‘predictor’ actually predicts a future recession. Rather, it appears to be more of a real time indicator, albeit not always an accurate one, that a recession is occurring.

AJ

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