Looking Ahead | Recession Indicators and an Act of Kindness

Looking Ahead: The headlines this week reported the now typical grim news about the economy—possible recession, higher inflation, rising mortgage rates, higher jobless claims. We don’t have to look hard to find reasons to be anxious about our current financial situation as a nation, which eventually plays out in our personal finances. However, as we mentioned in our Q2 Capital Market Highlights last week, we want to always be pushing past the headlines to remembering the ingenuity of capitalism and the history of markets which has ultimately rewarded long-term investors throughout a range of unique bear market environments. Consider it this way:

Recession Indicators: Of course, talk of a recession is fairly common these days. But how do we know when we’re actually in one? Many economists believe we are headed into one in the next year. And some Americans think we’re already in one. A committee of eight economists at the National Bureau of Economic Research (NBER) officially declares recessions in the United States. There are some standard rules of thumb—like two-quarters of negative gross domestic product—but no hard and fast rules. Consumer spending (which was up 1% according to the Wall Street Journal on Friday) and sentiment play a factor, job market layoffs and unemployment rates and monitoring industries most affected by interest rate hikes are also watched indicators. While it can feel like we’re headed directly into a recession, many economists would say that the troubling signs don’t guarantee a recession. We’re doing our best as a team to prepare for various outcomes.

Real Estate Recovery: One of the wildest rides during the global coronavirus pandemic was the U.S. real estate market. There are indicators that it is finally leveling out, though. According to Relator.com, the number of real estate listings rose by 18.7% in June compared with a year earlier. That’s the second straight month of growth and the fastest rise recorded since July 2017. In real numbers, that amounts to 98,000 more homes for sale every day compared to the same time last year. A glimmer of hope for home buyers? The flood of new homes on the market likely means a stronger negotiating position which could help temper the raging seller’s market it’s been of late. Higher rates may also help thin the level of demand out there in the market, which would potentially soften pricing levels.

Standing up for the Little Guy: In a rather classy move this week, the Avengers’ Ant-Man actor Paul Rudd reached out to a 12-year-old boy who had returned home at the end of the school year with a nearly unsigned yearbook. Brody Riddler, who says he endured a year of bullying, had even written a note to himself in the yearbook: “Hope you make some more friends. –Brody Riddler.” Seeing his mom’s post on Facebook, Rudd reached out to Riddler, Facetiming with him and sending him an Ant-Man helmet that was signed and read, “To my good friend Brody for when he takes on the world!” Rudd’s sentiment: “Remember that even when life is tough that things get better.” Even more impactful is the example he leaves for us to follow through on as many small acts of kindness as we can find. The collective impact is perhaps world-changing.