Are We Gonna Have a Recession?

Right now, at this moment in history, things are “weird,” if I may say so. It seems the topics at hand are politics and the economy. I understand that one may be tied to the other, as policies affect economics, finance, etc. However, let’s make this article about the title, as there seem to be plenty of other places to follow the political divide.

I remember about a year ago, we would constantly hear about the “pending recession”. Then, one day, we stopped hearing about it. I’m still not sure why, but here we are. Maybe it gets us back to the politics stuff. Anyway, are we gonna have a recession? Maybe.

When we think about economic growth, many things contribute to the equation. Manufacturing, employment, prices of goods, inflation, etc. Two things that we have not seen in their current forms for many years are inflation and rising interest rates. There are people that are 40 years old today who have not lived in this type of environment. In addition, the morphine (money printing and gov’t spending) from the past few years has finally worn off the patient, and economic growth will have to stand on it’s own. It is this combination of factors that may lead us into an officially measured downturn sometime in the near future.

However, the question is not whether we will have a recession. If we don’t, we will again sometime as it is just part of economic cycle of things. The real question is, how do we best manage through these events? Financially, and from a wealth management perspective, we are building portfolios to focus on this type of situation. Intellectually, we need to understand that market returns are based on averages over time. Politically, we do hope that whatever happens, that those in leadership fully understand the grind that is inflation and rising prices and do all they can through the policies they have available.

This article is not meant as a predictive tool in any way, as we cannot predict the future. However, we do believe that the winds currently blowing present a bit of a challenge for short-term economic growth. We need to look at several things differently moving forward as it relates to how we manage wealth, create economic opportunities, and build into the future. I have no doubt we can do it, and we will.

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