The Risk of Recession Isn’t Zero as the Market Seems to Think

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Market Overview Analysis by Lance Roberts covering: United States 3-Month, United States 10-Year. Read Lance Roberts's latest article on Investing.com

don’t think the economy will get even close to a recession. In January, they, on average, forecast sub-1% growth in each of the first three quarters of this year.Of course, this outlook seems contradictory to numerous indicators with a long history of preceding recessionary onsets, such as yield curve inversions.

However, given that nominal growth neared 18%, it will take much longer than normal for growth to revert below zero. The importance of that lead is that PCE comprises nearly 70% of the GDP calculation. Therefore, as consumer demand slows, the economy slows, and inflation falls. Real retail sales are now negative as consumers run out of excess savings, likely slowing economic growth further in the quarters ahead.

“The consequence of that lack of income growth is that they are the first to run into the limits of taking on additional debt.”

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