That is the conventional definition, but it's actually not exactly what NBER does in dating recession. You can see it in their own words here:
nber.org
But that's not really what I watch for. By the time NBER calls it, it is always too late for you to protect your retirement portfolio. They sometimes wait a year or more after a recession to call it a recession. Talk about lagging indicators. I pay a lot more attention to looming earnings recessions and other leading indicators, which can help me avoid big investing mistakes. I don't mind making a lot of return, but I try to avoid losses as best as I can. So that is what guides my philosophy and why I pay attention to the ebbs and flows of our economy.
The things you said the Fed and Trump are doing are all positive in my view, as well. So I agree with those things. Company earnings growth from this last quarter is rearview. There were a lot of one time events from the Trump stimulus that will not be repeated in 2019. So we will have bad comparisons. You can already see the WS forecasters lowering their EPS forecasts dramatically for 2019. Wage growth and unemployment at record lows are classic lagging indicators. In fact, they are usually one of the last things that happen right before we enter a downturn.
Keep in mind that all of us place way too much blame and credit on our President for the economy. They can help, if they are smart, like Trump has done. And they can hurt, especially if they are Socialists. But the 900 pound gorilla that can move the economy is the Fed, and they do so on a lag. Even thought Powell has stopped his hiking, if there was damage from what he did, then it is already done, but it has not yet shown in the economy. But we'll see it soon.
Anyway, like I said before, we better hope the recession either comes as soon as possible in 2019 or in 2021, but please, not during 2020. I'd rather see it now, because it would be short, sharp, and refreshing, which would make 2020 look golden by comparison and put Trump right back in office. |
