We've been hearing this phrase in the news cycles for some time now. Are we there yet? Are we going there? Will we avoid a recession and if so how? Our 4th posting from AssetMark in this Bear Market series takes a look at some of the reasons why the risk of a recession, while possible, remains low in 2022.
As mentioned in this latest posting, the most widely accepted definition of a recession is two consecutive quarters of negative economic growth as measured by gross domestic product (GDP). For the quarter, the US was hurt by a sharp drop in exports due to supply chain disruptions and decreased government spending. Yet at the same time, consumer and business spending increased. The consumer remains healthy and has accumulated savings during the pandemic. Second, inflation is taking a smaller bite out of consumer spending today relative to history. Third, the job market remains strong. Corporate profit margins are resilient and suggest companies have been able to successfully navigate inflation pressures.
For a more detailed look into the recession question, read this excellent presentation Is the US Headed for a Recession? During these stressful economic times, it's important that we don't let emotion alone drive our sentiment and decisions. Another reason why I think it was important for me to provide both historical and the most updated financial data through this series from AssetMark.