Stock Market Insights: Almost, But Not Quite

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“Ball two!” That hacked off my daughter who was pitching. She had great control and camped out in the “river” which is the black outline of home plate. The umpire wasn’t giving her the “river” as a strike and she was none too pleased. She didn’t say anything but the ump knew she disagreed. He hollered out to her, “it was almost, but not quite.” So are we in a recession? I think almost, but not quite.

The Commerce Department announced on July 28th that the U.S. Gross Domestic Product (GDP) was negative for the second consecutive three-month period which technically meets the criteria for a recession.

The two quarters in a row is a popular rule of thumb for a recession, but that doesn’t make it official. It’s the National Bureau of Economic Research (NBER), that officially announces whether we’re in a recession or not and it usually takes them a year to decide.

The two consecutive negative quarters are important in determining a recession, but other economic data must point to a recession too. For example, there must be high unemployment, falling income, and slowing retail sales.

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I don’t think we are in a recession because the U.S. unemployment and consumer spending, which is two-thirds of GDP, stayed strong in the first half of 2022.

I do think our economy is slowing and the higher interest rates are forcing consumers and businesses to slow their spending. This is exactly what the Federal Reserve has been trying to do, slow down the economy to slow down inflation.

So, what is an investor to do? Have a good investment plan and stick to it.

I remember another game when my daughter pitched a great groundball-inducing drop ball but the girl on third base made an error. She was rattled and threw a couple of uncharacteristic balls. Her coach went out to talk to her and started pitching well again. After the game, I asked her what the coach said to her. He told her, “We don’t live or die by one play. If we stick to our game plan, we have a chance to win.”

I would say in the same way investment-wise, we don’t live or die by one or two quarters. If you have a good investment plan and stick to it, you have a chance to do well.

Have a blessed week!

https://www.steadfastwealth.net/richard-baker

https://www.facebook.com/Dr.RichardBaker

2760 East Sunshine St. Springfield, MO 65804

Opinions voiced above are for general information only & not intended as specific advice or recommendations for any individual. All performance referenced is historical & is no guarantee of future results. All indices are unmanaged & can’t be invested into directly. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

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