Us Recession Risks Not High

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Us Recession Risks Not High

Us Recession Risks Are Not That High

We are once again talking about the recession risks in the USA. But if we look back, the same things have been said multiple times throughout the year.

So, if none of the forecasts for recession in the last few years were true, then how will it be true? There is no denying that some factors are indeed hinting at recession in the USA. However, the risks are not as high as the media portrays them to be!

Recession Forecasts Are Based On Lagging Data

Recently, Goldman Sachs has raised the alarm that there's a high chance of an economic downturn in the USA. This came as the stock market is trading at lows due to the US tariffs on Canada, China, and Mexico.

The stock markets are also reaching new lows, which is a sign of worsening market sentiment. But, we must also keep in consideration that markets had a good run in the last 2 years. So, if some sort of correction is taking place, it shouldn't be that much fo an issue.

Here's the thing - Most of the forecasts for recessions aree based on lagging economic data. If we look at GDP as an example, it is only revised at the end of each quarter, 1 year, and then 3 years. This means the recession in the USA could be off by 3 months, 1 year, or even more!

quick look at the ISM Composite Index (economically weighted) is in the expansion territory. This means there's no recent risk of recession in the USA.

Last but not least, the government spending is still strong which is fueling the economic growth. The Trump administration is also trying to reduce the deficit and spending. But, there's not much progress in that regard, which is a good thing for the US economy.

The bottom line is that recession fears are now making headlines once again. But, its best to take these warning signals with a grain of salt as they are based on lagging data.

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