The word recession was part of our day to day vocabulary not long ago. The odds of negative growth paired with growing inflation were high enough to have 20% corrections in the equity market. These days, however, very few people talk about a recession, and it seems there is a believe that the U.S. economy is so strong, fueled by AI, and a strong market, that we can avoid recessions. The chart below, tells us how much time the U.S. economy spent in recessions by decade since the 1900. It used to be almost half of the time, and now it’s less than 5% of the time. But perhaps the important conclusion from the chart, is that is very rare to spend zero time in a recesssion. As we confront the last innings of what Ray Dalio calls the Big debt cycle, these odds are against us. Economic growth has been strong fueled mostly by debt, but now we need to lower that debt and repay it. And that negatively affects growth. The bet of this new administration is that the U.S. can escape these odds of recession betting in Technology, tariffs and less regulation. Place your bets.
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