Key Manufacturing Indexes Flash Recession Warnings, Though Historically Expansions Outlast Downturns
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The ISM Manufacturing New Orders Index has predicted recessions without fail for 70 years when it drops below 43.5. It has dropped below this threshold twice in the past 15 months.
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The Purchasing Managers' Index (PMI) has been in contraction territory for 15 straight months. This hasn't happened in 40 years without a recession.
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Historically, about two-thirds of S&P 500 drawdowns have occurred after, not before, a recession. This suggests potential turbulence ahead.
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Although recessions lead to market declines, periods of expansion last much longer than recessions. Remaining patient pays off long-term.
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Over the past 94 years, the average S&P 500 bull market has lasted over 3 times longer than the average bear market. Long-term optimism is warranted.