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WEEKLY MARKET COMMENTARY | FEBRUARY 16, 2023
This time may be different…or it may not be.
There has been a lot of speculation about how the Federal Reserve’s policies will affect the United States economy. Economists have differing opinions about whether the country is headed for:
It’s an important question because recessions often are accompanied by layoffs, rising unemployment rates, dwindling investor confidence, lower consumer spending, and stock market downturns.
Recently, a new theory bubbled up.
The United States may be experiencing rolling recessions, reported Rich Miller of Bloomberg. “Now there’s a new economic meme making the rounds. It’s called a rolling recession, and it’s a bit of a hybrid. One industry suffers a contraction, then another, but the economy as a whole never swoons, and the job market largely holds up…That framework doesn’t explain everything that’s going on with this puzzling post-pandemic economy, but it’s as good a description as any of what the U.S. has been going through since the Federal Reserve began lifting interest rates from zero in March of last year.”
Uncertainty around current economic conditions has a lot to do with the pandemic, according to Schwab’s chief investment strategist Liz Ann Sonders whose talk at the January National Retail Federation (NRF) conference was reported on by Fiona Soltes for the National Retail Federation. When lockdowns ended, demand for goods lifted prices and helped push inflation higher. When services became available again, demand shifted and we saw “pockets of weakness in many categories on the goods side, certainly in housing, that are definitely in recession territory.”
If rolling recessions don’t meld into a national recession, we could see continued economic expansion as inflation moves lower. It’s also possible we could see economic growth heat up and inflation remain at higher levels than we’ve become accustomed to having. It’s just too early to tell.
Major U.S. stock indices moved lower last week, reported Teresa Rivas of Barron’s. Treasury yields rose across maturities last week as economic data and Fed officials suggested that further rate hikes may be ahead.
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Sources:
https://www.investopedia.com/terms/h/hardlanding.asp
https://www.investopedia.com/terms/r/recession.asp
https://www.bloomberg.com/news/articles/2023-02-09/what-is-a-rolling-recession-us-could-escape-economic-pain?cmpid=BBD020923_NEF&utm_medium=email&utm_source=newsletter&utm_term=230209&utm_campaign=nef (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/02-13-23_Businessweek_Forget%20Hard%20or%20Soft%20Landing_3.pdf)
https://nrf.com/blog/charles-schwab-chief-investment-strategist-talks-rolling-recession
https://www.barrons.com/articles/stock-market-has-worst-week-of-2023-no-news-is-bad-news-ed6cc72c?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/02-13-23_Barrons_The%20Stock%20Market%20Just%20Had%20Its%20Worst%20Week%20of%20the%20Year_5.pdf)
https://www.cnbc.com/2023/02/10/us-treasury-yields-investors-await-data-fed-speaker-remarks.html
https://hbr.org/2023/01/how-financial-accounting-screws-up-hr (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/02-13-23_HBR_How%20Financial%20Accounting%20Screws%20Up%20HR_7.pdf)
https://www.bloomberg.com/opinion/articles/2023-02-08/us-companies-aren-t-firing-people-as-they-usually-do (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/02-13-23_Bloomberg_US%20Companies%20Arent%20Firing%20As%20They%20Usually%20Do_8.pdf)
https://www.inc.com/partners-in-leadership/31-quotes-from-great-leaders-to-improve-workplace-satisfaction-for-employees.html
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