In the past four to six weeks, the financial forecasters and entertainment media hosts have been stoking fears of recession occurring in the next twelve to eighteen months. Additionally, numerous financial TV hosts and commentators have performed a Paul Revere like “recession is coming” warning (e.g., “Recession Countdown Clock) despite existing strong fundamentals of the U.S. economy. Essentially, they’re following the standard news media mantra that “if it bleeds (economy perceived to be falling into recession), it leads”.
Whether recession becomes the top trending financial search engine topic or fanned by the hysterical coverage by the financial entertainment media, Americans are succumbing to worry about recession. As a result, they are behaving and taking action that may be detrimental to their long term financial goals and health. Several reports indicated that investors have been moving from equities to less riskier asset classes of bonds, cash and cash equivalents.
Recently, a financial pundit commented that we’re in a peculiar environment of increased U.S. recession fears in the midst of a fundamentally strong economy. Anecdotally, the growing recession fears are due to the near constant media coverage about recession. This recession talk persist despite the strong economic fundamentals, an economy that is still growing, and a strong labor market and consumer spending. The pundit also commented when such dichotomous conditions are present, there are always opportunities present for the savvy and patient investor.
Bottom line, the U.S. economy remains strong and is still growing, but the rate of economic growth is slowing (decelerating growth). Labor market remains healthy and the consumer is spending. The uncertainty of the trade turmoil has caused a slowdown in capital expenditures and business investment. One question disturbing economists is whether businesses have slowdown on hiring due to economic uncertainty. And, finally, Americans are working and Americans are getting paid, according to the August 2019 Payroll numbers.
