The Dreaded R-Word?

The data is not looking so rosy.

???? The World Bank says the war in Ukraine, China lockdowns, supply-chain disruptions, and the risk of stagflation will make it hard for many countries to avoid recession. In the US and Europe, growth is forecast to slow to 2.5% in 2022. China’s growth is projected to fall to 4.3%, and Russia is expected to contract by almost 9%.

???? The Atlanta Federal Reserve’s GDPNow tracker is pointing to an annualized gain of just 0.9% for the USA in 2Q, down from an estimated 1.3% increase less than a week ago. 1Q growth was down 1.5% so a second consecutive quarter of negative growth meets a rule-of-thumb definition for recession.

???? The Organization for Economic Cooperation and Development (OECD) estimates that global GDP will hit 3% in 2022 — a 1.5 percentage point downgrade from a projection done in December. It has downplayed the possibility of a prolonged period of so-called “stagflation.”

Source: World Bank - Global Economic Prospects?(June 2022)

What does it all mean?

?? Investors can take a long-term view and ignore near-term economic cycles.

?? Or Investors can de-risk and keep some cash as dry powder.

Choose an approach that works best for you.

My personal view is that it?s good to come in during a storm and then make hay when the sun shines.

Recessions are not fun. The World Bank estimates that roughly 75 million more people will face extreme poverty than were expected before the pandemic.

But recessions can also present massive opportunities.

Your favorite stocks could be on sale. Real money can be made.

Business owners who reinvest into their businesses while competitors hunker down can be primed for growth when the cycle turns.

The economy always has cycles. Seeing opportunities or limitations during a recession can be a matter of perspective.

Do you see the glass half full or half empty? What do you think?