Recession or Recovery?

So, which is it, recession or recovery? On June 8, 2020 Yahoo Finance posted an article whose headline read, “The US Economy is Officially in Recession.” The following day, June 9, 2020, First Trust Corporation analysts sent an article to me entitled, “The Recession is Over.” You see, if you thought that was a fast recovery, you had no idea how fast.

To give you a small sampling of the logic for both here are a few points of note:

  1. The National Bureau of Economic Research (NBER) said that the COVID-19 crisis has officially launched the US into recession, thus ending the longest economic expansion on record. (NBER, June 8, 2020)
  2. The recession that started in March is the sharpest downturn since the Great Depression. As it turns out, it was also the shortest. (First Trust, June 9,2020)
  3. The unemployment rate, projected by numerous economists to be 19.5% in April, has now changed to 13.3%.  (First Trust, June 9, 2020)
  4. Some analysts are now saying the unemployment report is no longer reliable because of the Paycheck Protection Program (PPP) loans and unemployment support. 
  5. The acceleration in federal tax receipts signals the economy has turned a corner. (First Trust, June 9, 2020)
  6. Profits will be down substantially in the second quarter but should recovery strongly in the several quarters thereafter. (First Trust, June 9, 2020)
  7. And my favorite sentence from First Trust, “No one knows what the second half will bring, much less 2021 and beyond,” And you thought my job was easy. ;_)   

Just to give you a sense of how great human beings are at predicting the future I thought you might also like to revisit the TOP 30 Risks of the Markets in 2018, according to DB Global Markets Research. Here they are:

As a reminder, in the midst of all, I write, at most, a monthly newsletter. So, if you read one thing, I may already, as you have seen from your portfolios, have begun to do another. This includes picking up high quality companies for your portfolio in the midst of the panic.  I remain cognizant of the need for cash to employ after this current overbought market evolves from profit taking to technical support. Bottom line: investors have been forced to look at the market through technical eyes as fundamental data reporting has been put on pause. This technical data suggests we are in a new economic expansion. We shall see.

Vaughn Woods, CFP, MBA

Vaughn Woods Financial Group, Inc.

2226 Avenida De la Playa

La Jolla, CA 92037

Investors should be aware that there are risks inherent in all investments such as fluctuations in investment principal.  Past performance is not a guarantee of future results.  Asset allocation cannot assure a profit nor protect against loss.  Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed.  Views expressed in this newsletter may not reflect the views of Bolton Global Capital or Bolton Global Asset Management.  The information provided is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice.  VW1/VWA0250.

The US Economy is Officially in Recession, NBER:

First Trust – Monday Morning Outlook “The Recession is Over”, June 8, 2020