For what seems like YEARS now, some of the talking heads on the TV have been warning American investors that there was a recession looming…
That some of the economic markers were closing in or AT imminent recession levels.
While that is SORT of true…
There wasn’t enough for us to panic about yet.
But is that true?
Is there a recession looming?
Well…
To answer you honestly – no.
The “moderately” expanding US economy may have slowed a little late last year due to a manufacturing slump and seemingly weak global growth…
But many of the markers that the investing world says signal a coming recession – have receded and the likelihood of a recession has dropped significantly.
At least that is what the U.S. Federal Reserve said in its latest monetary policy report to the US government.
The part of the report that we are the most interested in said, “Downside risks to the U.S. outlook seem to have receded in the latter part of the year, as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilizing, and financial conditions eased.”
Take all that in conjunction with the fact that both the US job markets continues to strengthen and consumer confidence remains high… and that’s a recipe for an awesome economic landscape.
The Fed report continued…
“The likelihood of a recession occurring over the next year has fallen noticeably in recent months.”
“Fallen NOTICEABLY…”
That means that maybe, just maybe, the talking heads can now lower their chatter on “recession” and concentrate on either finding new ways to profit – or simply report the news.
We don’t need them to editorialize on the economy…
We’re living in it – we can tell what’s going on.
But that doesn’t mean we can get cocky – there’s still something out there that can DEFINITELY wreak havoc on the booming economy…
Because something the Fed did note in the report – was the possibility of the coronavirus’ impact on the markets.
The virus running around out there is the “x-factor”…
It’s the one thing that could change things going forward – because when you combine the spreading outbreak of coronavirus in China, “elevated” asset values, and near-record levels of low-grade corporate debt…
You’ve got a pretty big problem if some rogue economic downturn were to occur.
The Fed report did caution that “the recent emergence of the coronavirus, however, could lead to disruptions in China that could spill over to the rest of the global economy.”
So while there may not be any factors that point to a recession…
There are some risks to our economy.
Such as how the rest of the world’s economies are doing and some geopolitical stress…
But we should take comfort in the fact that the Fed sees evidence that “the global slowdown in manufacturing and trade appears to be at an end, and consumer spending and services activity around the world continue to hold up.”
This is VERY good news.
The one thing many people were interested in the report (present company included) was and analysis of how last year’s slump in manufacturing impacted economic growth overall…
While everybody was anticipating “recession” the Fed concluded that the slowdown in factory output – which pretty much effects almost every other industry – cut overall growth in GDP from between 0.2 and 0.5 percentage points.
That’s really chump change…
As it falls WAY short of the threshold that many claim is the sign of a coming recession.
So…
We did good!
Which means the first half of the year should see the markets humming…
I can’t wait to get the next round of recommendations out GorillaTrades subscribers – as I’m pumped on this good news – and the data the report presents should help some of the stocks on the cusp hit all the markers they need to in order to become a GT pick.
If you’d like to be on board for the next one – please – consider joining today…
Let us do the heavy lifting – you sit back and relax.
Of course, if you’d rather be a one-man (or woman) wolf pack – we get it…
Just trade with confidence – as 2020 looks like it’s going to be a VERY good year.
“Good news is rare these days, and every glittering ounce of it should be cherished and hoarded and worshipped and fondled like a priceless diamond.” – Hunter S. Thompson