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  • Writer's pictureJeran Van Alfen, CFP®

Did We Already Have a Recession?

A constant question over the last year has been, “Are we headed for a recession?” Experts have been making cases for their economic predictions and analysts have been trying to foretell how the financial markets would respond to a poor economy since mid-2022. However, here we are in July of 2023 and there hasn’t been a widespread recession…or has there?


The answer to that question is no, we haven’t seen the widespread recession that many have feared would happen.


Building anticipation


In July 2022, it was reported that the US GDP had experienced 2 consecutive quarters of contraction in a row. This is the typical definition of a recession, however, at the time there were so many non-recessionary indicators happening in the economy that most experts were adamant that we were not in a recession[1]. But the consensus was that it would happen soon. In fact, in October of 2022 an economic model from Bloomberg predicted a 100% chance of a recession in 2023[2]. Add to this that the yield curve has been inverted since late 2022, which historically is one of the most trusted indicators that recession is near. All of this has led to one of the most anticipated recessions ever that was supposed to happen this year.


So where are we now?


The financial markets have shrugged off recession worries so far this year as you can see by the mid-year results below.


While leading economic indicators are still giving us plenty of reasons to worry, the economy continues to expand in what economists call the “late cycle”. The chart below represents this and points out what characteristics we’re experiencing right now that are typical of this stage in the business cycle.



Have you heard of a rolling recession?


Some professionals are saying that the long-anticipated recession has been happening, just not all at once. This chart shows how several parts of the economy have fallen drastically from peaks and are already rebounding from their respective drawdowns. In the accompanying article by Charles Schwab, they re-iterate a thesis that the recession is in process and rolling though industries separately.

Experts from Capital Group, agree with this thesis. Their thoughts are: “Different sectors of the economy have experienced downturns at different times. Thanks to this rare case of a “rolling” recession, the U.S. may not experience a traditional recession at all this year, or next, even with the dual pressures of elevated inflation and high interest rates.”[3]

Fidelity experts advise that it would be extremely rare for the economy to avert a recession or jump from “late cycle” back to “mid-cycle” growth, however, they expect that any upcoming recession would be milder than the extreme global recessions that we have experienced in the last 20 years.


Where do we go from here?


All of this information shows how extremely difficult it is to make predictions. As investors, we accept that the economy is constantly cyclical, and we plan for the factors that affect the industries and companies that we invest in.


Since we can’t predict or control the economy it is important to create a financial plan that considers risk. Here are 3 important pieces of risk management to remember when recession worries are evident:

  1. Setting up a cash reserve target to provide money in case of a loss of income is an important foundation of a financial plan.

  2. Make a list of essential and non-essential expenses. Try to eliminate any unnecessary spending or debt payments and allocate money to savings.

  3. Review your asset allocation. It is unwise to sell investments that are earmarked for long-term growth. Instead, make sure that your investments are allocated appropriately for your objectives and your time horizon for when you need the money.


Centered Financial, LLC is a registered investment adviser offering advisory services in the State of California, Utah, Texas and in other jurisdictions where exempted. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques, strategies, or investments discussed are suitable for all investors or will yield positive outcomes. To determine which strategies or investment(s) may be appropriate for you, consult your financial adviser prior to investing. Any discussion of strategies related to tax or legal planning is general and is not intended as tax or legal advice. Please consult appropriate tax and legal professionals for recommendations pertaining to your specific situation.


[1] https://www.npr.org/2022/07/28/1113649843/gdp-2q-economy-2022-recession-two-quarters

[3] https://www.capitalgroup.com/advisor/insights/articles/us-economy-rolling-recession.html?sfid=1937599489&cid=81030520&et_cid=81030520&cgsrc=SFMC&alias=btn-LP-A1cta-advisor

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