6 Apr 2023
Unemployment: US Recession???
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
Interest rates have either peaked or are near peak in the United States and the economic signals are still pointing to a recession in the United States this year.
The ingredients are all present for this recipe- we have rising interest rates, high inflation and tight lending standards but yet unemployment is at records lows in the United States and same in other developed nations.
Click for charts.
Is it possible to have a recession (defined as two consecutive quarters of negative GDP growth) without a rise in unemployment?
The technical answer is NO.
Unemployment has always increased in a recession but let’s see what happens this time if the United States does go into a recession this year.
The economic signals are perplexing but if we look to Benjamin Graham value investing principles then the investment strategy becomes clear, just continue to invest according to your appetite for volatility and look to buy more quality assets when discounted prices present.
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