We either are or are not currently in the thirteenth recession in the modern era since the Great Depression. Even though we have experienced two consecutive quarters of negative GDP growth, strong employment, profits, and other economic indicators have led the National Bureau of Economic Research to withhold the official title.
Let us assume that the NBER officially designates the economy as being in a recession in 2023. What would change? As we hope you will see, none of the economic or financial outcomes that we are about to examine would change.
Here is the full history of the 12 recessions that we have recorded since 1948. You can see how the S&P500 behaved shortly before the economic recession (remember that the market and the economy are not the same thing and that the former is a forward indicator of the latter), and what market returns were like in the time periods that followed.
All these times were the result of crises of one kind or another, and we cannot ignore the economic turmoil and the pain of market uncertainty that occurred. Each one appeared to be the end of the world as we knew it and in some ways each one was. As is exactly the case today, nobody could predict when, why, or how that crisis or recession would end. If you remember any of these episodes personally, you may be reliving the experience today.
The advantage that investors like us have is perspective. It is easy to feel that “this time is different”, and it may be. Every historical catastrophe is different, and each one marks the transition from one order to a new one. Unprecedented things happen every day.
The thing that each historical episode had in common with the rest was that they were temporary. We believe that the current situation is temporary as well. In each past case, capital markets around the world resumed their growth trajectory far faster than might have seemed possible during the depths of that crisis.
We know how uncomfortable these times can be. If you would like to talk about this research, your portfolio, or anything else, we are here.
Dawna DuClau, FPQP®
Paraplanner, Acadium Financial Partners
Financial Professional, RJFS
850 NW Federal Hwy, Suite 160
Stuart, FL 34994
Frank Hujsa, CFP®, CLU®
Partner, Acadium Financial Partners
Financial Adviser, RJFS
27499 Riverview Center Boulevard, Suite 108
Bonita Springs, FL 34134
Any opinions are those of Frank Hujsa and Dawna DuClau are not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary.
Securities offered through Raymond James Financial Services, Inc. member FINRA/SIPC. Acadium Financial Partners is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.