As I meet with clients this summer, one question that keeps coming up is, are we headed for a recession? The answer to this question depends on who you ask.
Typically, a recession occurs when GDP (Gross Domestic Product) declines in the US for two fiscal quarters. 2022 saw GDP fall 1.6% in the first quarter and 0.9% in the second.
According to the National Bureau of Economic Research, the leading authority on when US recessions begin and end, the US is not in a recession. The reasons for this are three-fold: The US job market is strong, industrial production is up, and consumer spending is steady.
Rather than debate the gloom and doom of the news media, let’s look at the realities that are affecting negative GDP growth:
- Inflation, inflation, inflation: I don’t have to tell you how expensive everything is right now. Just visit your local gas pump or grocery store, you know. Inflation is at 9.1%, its highest rate since 1981.
- Markets are volatile: Upswings and downturns can make even the savviest investor feel unbalanced.
- Interest Rates are rising: The Federal Reserve raised interest rates drastically this year, from 0.25% to 1.75%.
For my clients, and any prudent investor, here are a few suggestions of what you can do:
- Keep in mind, investing is a long-term strategy.
- Portfolio Diversification is a must.
- In a rising rate environment, fixed income investing should be very calculated.
At Schott Financial Management, we offer no-obligation consultations and provide solutions for our clients. You can call us at 928-776-1031 or visit www.schottfinancialmanagement.com.
Securities are offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services are offered through Cambridge, a Registered Investment Adviser. Schott Financial Management and Cambridge are not affiliated.