Are we technically in a recession? The economy shrank for a second quarter in a row based on the initial reported figures. However, this data often is restated later and only in hindsight are numbers confirmed and a recession officially determined. Our economy has grown at an average rate of just over 3% since 1948. Just like in our own personal finances, can we expect our country’s GDP to grow every quarter for years?
If this is determined to be a recession, it will be the first one since the “Great Recession” of 2007-2009 not counting the Pandemic recession of February and March 2020. There was only one named depression in our history. It turns out that the term Great Depression was selected simply because it was thought to sound better than “panic” or “crisis”. Since World War II recessions have averaged only 11 months, with the Great Recession being the longest at 18 months.
If we technically are in or will be in a recession, it certainly appears to be one of the strangest recessions we have ever experienced. U.S. and world GDP may have gone down for 6 months, but jobs are plentiful, corporate profits are still high and wages are increasing. The global pandemic has resulted in continued supply chain disruptions across the world, the first significant inflation seen in forty years, and rising interest rates used to combat inflation. This recession is expected to be very mild and short but only time will tell.
As Mark Twain is quoted “History doesn’t repeat itself, but it often rhymes”. This is just another normal part of the cycle. No need to be fearful and have external forces dictate your actions. Let your own life and goals dictate needed financial actions. You can only control what you can control. What can you do to cut costs, save more, or prepare for a longer recession than planned? What changes need to be made to your investment portfolio?
We will figure out what to do and get through this together. Reach out if you would like to discuss the positioning of your personal portfolio.
Peter Bobolia, CFP®, ChFC®
Family First Financial Planning
Hourly fee financial planner located in Stuart, Florida, serving clients throughout Florida and nationwide where allowed. Meet in Jupiter, West Palm Beach, Boynton Beach, or Stuart or via video chat or phone. Helping clients through fiduciary, objective, advice about retirement, investments, estate planning, college, and more. When you need financial planning advice, contact me at 772-781-7648.