Recession Signs Flash as Markets Face Renewed Turbulence
• The U.S. Treasury yield curve recently suffered its steepest inversion since 1981, which has preceded every recession since 1955. This suggests a recession may hit in 6-24 months.
• The Conference Board Leading Economic Index has declined for 19 straight months, also signaling impending economic contraction.
• During past recessions, the S&P 500 has plunged an average of 32% from peak to trough. If a recession hits now, the index could give up another 27% beyond its 2022 gains.
• However, the S&P 500 typically bottoms about 4 months before recessions end and rallies 30% off its low in that time. Timing the bottom is virtually impossible.
• History suggests the best course of action is to stay invested during downturns rather than attempt to time the market, as the S&P 500 reaches new highs after every recession.