Key Economic Indicators Predict Looming Recession, Though Historical Precedent Offers Long-Term Stock Market Optimism
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The ISM Manufacturing New Orders Index has predicted every recession for the past 70 years when it falls below 43.5 for 2 months. It has fallen below 43.5 for the past 2 months, predicting a likely recession.
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The Purchasing Managers' Index has been in contraction territory for 15 straight months, the longest stretch since the early 1980s. This also points to an oncoming recession.
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2/3rds of historical S&P 500 drawdowns have occurred after, not before, a recession was declared. This suggests potential turbulence ahead for stocks.
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Even if a bear market hits, the S&P 500 historically recovers to new highs after declines. Past performance suggests long-term optimism.
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The average bull market for the S&P 500 lasts around 3.5 times longer than the average bear market. Patient, long-term investors tend to see success.