As Liz Ann Sonders and Kevin Gordon, investment strategists at Charles Schwab, put it in a note to investors, “Several segments of the economy are experiencing their own recessions, including housing and segments of the goods side of the economy.”
Edward Yardeni, an independent Wall Street economist, says that in addition to housing, the auto, semiconductor, personal computer and retail sectors have been going through what he calls “rolling recessions.” Much of this is already abating, he says, adding that it’s entirely possible that the slowdowns underway won’t be deep enough or pervasive enough to become a classic recession.
In this essentially benign view, corporate earnings growth is almost certain to decline, stocks will remain volatile, and inflation will remain well above 2 percent. But the situation will improve fairly soon. There will still be rough moments in the markets in the months ahead, but the prospects for the next year or so would be quite positive.
Already in Recession?
Compared with some alternatives, it might even be a good thing if we were already in a recession.
Here’s the logic, from Ned Davis Research, an independent markets research firm, which accepts the consensus wisdom that a recession sometime within the next year is probable.
In an interview, Ed Clissold, the firm’s chief U.S. strategist, pointed out that the stock market typically rebounds after midterm elections, but that a recession in 2023 would probably smother a postelection bounce.
Therefore, he said, the “most bullish scenario I’ve come up with, given these assumptions, would be that we are in a recession already, or will be very soon, and that it ends in early 2023.”
That timing is theoretically possible, though Mr. Clissold isn’t counting on it. The National Bureau of Economic Research doesn’t declare a recession until long after the downturn has started, and often, not until it has ended. We could well be in one now.