Visualizing the Current Market in Relation to Past Recessions
Updated
It is helpful to view past recession trajectories to get a visual idea of where we are at the moment. I chose the recessions which were most relevant to today's market conditions. The 01 (purple) and 08-09 (dark blue) recessions were the first "modern" recessions where MMT was being implemented and tech made up a significant chunk of the market. The 70 (reddish brown) and 73-75 (green) recessions were the first stagflation recessions of the 70s. Finally, the Great Depression (light blue) is shown as a worst case scenario. If this current period mirrors history, a bounce or sideways movement through the rest of 2022 wouldn't be surprising. While a depression trajectory is possible, I don't believe it is most likely at this point.
Note
Many people are calling a new bull market now that inflation is dropping. I think it's too early. The current trajectory still closely mirrors 08-09.Note
This week's FOMC meeting suggested the FED isn't ready to cave in the battle against inflation. More pain comes before the pivot.
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