How a US Recession , Could Be Great News , for Investors.
Business Insider reports that the United States'
economy is shrinking amid fears of a recession,
yet the stock market seems to be thriving.
In July, the S&P rose by 9.1%, scoring its
best monthly gain since the post-lockdown
rebound in November of 2020.
Other indexes saw similar gains, signaling that market pessimism could be turning around.
Last week, data showed
that the economy had shrunk
for its second consecutive quarter.
Inflation remains at a four-decade high, while
Americans' financial cushions are rapidly dwindling
and confidence in the economy has hit near record lows. .
In the event of a recession, the Federal Reserve would have to consider lowering interest rates, which would be a big boon for investors.
In the event of a recession, the Federal Reserve would have to consider lowering interest rates, which would be a big boon for investors.
Lower interest rates would
boost valuations, as it would
allow companies to borrow more.
Investors are now betting on economic growth
to slow so much that the Fed will be forced
to rollback interest rate hikes announced in 2022.
Investors are now betting on economic growth
to slow so much that the Fed will be forced
to rollback interest rate hikes announced in 2022.
However, Business Insider reports that officials
at the Fed have signaled that interest rate hikes
are expected to continue through 2023.
You've got to take any estimates of what rates will be next year with a grain of salt. There's significantly more uncertainty now about the path ahead than I think there ordinarily is, and ordinarily it's quite high, Jerome Powell, Federal Reserve Chair, via Business Insider.
You've got to take any estimates of what rates will be next year with a grain of salt. There's significantly more uncertainty now about the path ahead than I think there ordinarily is, and ordinarily it's quite high, Jerome Powell, Federal Reserve Chair, via Business Insider