Analysts Fear That the US Economy May Enter a Recession in the Next Months
Some analysts are expressing concern that a recession may be imminent due to the uncertain situation of the American economy. The chief market strategist, Tony Dwyer, has voiced concerns about the status of the economy and has issued a warning that a recession could be on the horizon. Dwyer highlighted that the recent increase in the two-year yield, which is at its highest point in the cycle, is a warning indication that the October low was not truly the low in an interview with CNBC.
Dwyer’s worries about the US economy are shared by many others. Concerns regarding the course of the economy have been voiced by other specialists as well. “The higher the two-year yield climbs, the more likely we are heading into a recession,” claims Dwyer. The soft landing scenario, which was based on the information available at the time, may no longer be realistic, in his opinion. Dwyer stated: “A recession doesn’t happen overnight or in a single tick. The journey is lengthy.”
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Dwyer grounds his prediction of a recession on the current rate of inverted yield curves, which is approximately 87%. According to him, all that is required for a recession to be signaled is for 55% of them to be inverted. Dwyer claims that during the soft landings in 1966, 1995, and 2016, the leading economic indicators weren’t even close to being as weak as they are right now. According to him, the nation has experienced a recession every time the key economic indicators have been this poor.
Dwyer also said that the demand for C&I loans is at a level that has been linked to recessions, and that bank lending requirements have tightened to that extent. He stated: “I believe the evidence points to a recession. Simply put, we haven’t yet had enough time to travel there.”
Another area that analysts are constantly watching is the stock market. Dwyer responded when asked how the stock market often bottoms out during and after a recession: “Before a recession, they never hit their bottom. Hence, it took 23 1/2 weeks on average and median to reach the S&P 500 low from the start of the recession.”
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Other strategists and investors have somewhat delayed Dwyer’s call for a recession, but he still thinks one might occur in the second half of 2023. The data are there, he argued, therefore we should be concerned.
A recession could have a significant effect on the US economy. Reduced consumer spending, job losses, and diminished business profitability can all result from a recession. These elements may cause the stock market to fall, which in turn may limit economic growth.
It is crucial to remember that not all professionals concur with Dwyer’s opinion. According to some economists, the US economy will keep expanding steadily, and the existing economic indications do not point to a recession.
It is crucial for people and businesses to get ready for any potential economic issues regardless of the outcome. This can entail making a financial plan, paying down debt, and buying a variety of assets. People and organizations may navigate economic uncertainty and reduce possible risks by remaining informed and being proactive.
