{"id":589,"date":"2022-07-08T10:00:33","date_gmt":"2022-07-08T10:00:33","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/?p=589"},"modified":"2025-02-19T21:00:05","modified_gmt":"2025-02-19T21:00:05","slug":"macroeconomic-perspectives-is-a-recession-imminent","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/2022\/07\/08\/macroeconomic-perspectives-is-a-recession-imminent\/","title":{"rendered":"Macroeconomic Perspectives: Is a Recession Imminent?"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tWith slowing global growth, persistently high inflation rates and as the central banks have taken a more aggressive position to combat inflation by raising interest rates faster than anticipated, the media has been preoccupied with evoking fear that a recession is imminent. While this is a legitimate worry, we suggest that maintaining perspective may be worthwhile. Economies, like financial markets, are cyclical in nature and are naturally prone to expanding and contracting over time. A recession can occur when economic activity declines \u2014 commonly defined as two successive quarters of declining gross domestic product (GDP), the measure used to gauge economic health. It\u2019s not normal for any economy to be in a perpetual expansion, and contractions do occur from time to time. Yet, recessions can be quite different in their length and intensity.\n\nWhile the Great Depression of the 1930s is the longest contraction historically, consider that our most recent recession was the shortest on record. This precipitated during the depths of the pandemic due to the economic shutdowns in February 2020, but lasted only until April of that year \u2014 just three months in length. Some are comparing our current inflationary situation to the 1970s, suggesting that we are headed for a similar period of economic slowdown that followed. Yet, let\u2019s not forget that today\u2019s central bankers are taking more rapid action to try and curb inflation. In the early 1970s, the U.S. Federal Reserve was easing monetary policy. It wasn\u2019t until Paul Volcker headed the Fed in 1979 that he raised the Fed funds rate to a whopping 20 percent to try and end high inflation, but this wasn\u2019t until after almost a full decade of persistently high inflation. This shock led to more severe economic consequences. Today, there are a variety of reasons to keep perspective.\n\n\"\"\n\nLabour markets and household balance sheets are at healthy levels to support consumer resilience, and consumer spending has been robust in the services industry. While some corporate earnings have missed expectations recently, it was anticipated that there would be a period of adjustment as we returned to normal from the pandemic. In some cases, record stimulus skewed consumer demand; in others, the economic shutdowns created ongoing supply chain issues. High inflation has also driven up many companies\u2019 costs, but this inflation is not expected to be permanent. Recessions are also usually characterized by excesses of inventory, capacity or credit, which aren\u2019t largely apparent at the moment. This is not to suggest we don\u2019t face many challenges. The pandemic has caused a variety of problems, including significant stimulus debt, higher inflation, supply chain disruptions, slower growth and more. We are now confronted with new issues created by the conflict overseas. Continued patience is needed as we resolve these issues and move forward. However, some balance may be warranted to address the current discussion of recession. Investors should also remember that portfolios positioned for the longer term have been structured with the expectation that economic and financial markets will experience both ups and downs. Most importantly, when a recession eventually does arrive, remember that it will be temporary.\n\n\"\"\n\n

The information contained herein has been provided for information purposes only. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information has been provided by J. Hirasawa & Associates and is drawn from sources believed to be reliable.\nThe information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual\u2019s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) and the authors do not guarantee the accuracy or completeness of the information contained herein, nor does WAPW, nor the authors, assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.\n\u00a9\ufe0f 2023, Wellington-Altus Private Wealth Inc. ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

With slowing global growth, persistently high inflation rates and as the central banks have taken a more aggressive position to combat inflation by raising interest rates faster than anticipated, the media has been preoccupied with evoking fear that a recession is imminent. While this is a legitimate worry, we suggest that maintaining perspective may be […]<\/p>\n","protected":false},"author":68,"featured_media":3017,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[40],"tags":[101,43,99,100,98],"class_list":["post-589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-business-cycle","tag-inflation","tag-labour-markets","tag-pandemic","tag-recession"],"_links":{"self":[{"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/posts\/589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/users\/68"}],"replies":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/comments?post=589"}],"version-history":[{"count":3,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/posts\/589\/revisions"}],"predecessor-version":[{"id":1743,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/posts\/589\/revisions\/1743"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/media\/3017"}],"wp:attachment":[{"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/media?parent=589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/categories?post=589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/towerwealthadvisory\/wp-json\/wp\/v2\/tags?post=589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}