SPX - Calculating the odds of a Recession
Understanding the possibility and consequences of a recession by determine the strength of U.S Economy using key economic indicators
GDP - In order to sustain the economy consumption must be increased meanwhile, Fed trying to tame inflation by implementing policies that will
going to reduce the demand. Ergo, The GDP is expected to fall by 1.25 next quarter.
UNEMPLOYMENT RATE - Every time a huge trend of layoffs starts 45 days prior to a recession. at this point, No major corporate layoffs have taken
place and currently the unemployment rate is at historically low levels.
INFLATION RATE - High oil prices, Supply Chain disruption, Hyper inflation risks across the globe and most importantly higher interest rates, There
is no doubt that inflation rate will counting rising.
CONSUMER SENTIMENT INDEX - Current level is below 60 which reflects lower consumer confidence which will result in lower consumer spending
DOLLAR's PURCHASING POWER - U.S Dollar getting stronger against other fiat currencies, However it's purchasing power is eroding, High interest
rates have strengthened the U.S dollar and it's expected to continue rising.
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - Short term vs Long term treasury inflows, Whenever yield nears the
zero or becomes negative then recession follows.
Federal Funds Rate - Interest rates are expected to hit 3.75% by the end of this year, There will be several rate hikes in the following months that will result in global economic slowdown.
Geopolitical Risk - Disruption of world order has already begun with Russia's Invasion of Ukraine, Growing risks of China and Taiwan conflicts, Shri Lanka's Crisis, Turkey's Hyperinflation risk and if U.S economy crashes then a new world order is imminent.
Conclusion: Current Health status of U.S economy is bearable However, projection for upcoming quarter is uncertain,
the most optimistic part is low unemployment rates, Financially strong businesses and Strong households
with higher savings rate, in turns following rate hikes cannot be associated with an inevitable recession.
Health care and defense sectors with high dividend yield stocks are greater alternatives to invest in.
GDP - In order to sustain the economy consumption must be increased meanwhile, Fed trying to tame inflation by implementing policies that will
going to reduce the demand. Ergo, The GDP is expected to fall by 1.25 next quarter.
UNEMPLOYMENT RATE - Every time a huge trend of layoffs starts 45 days prior to a recession. at this point, No major corporate layoffs have taken
place and currently the unemployment rate is at historically low levels.
INFLATION RATE - High oil prices, Supply Chain disruption, Hyper inflation risks across the globe and most importantly higher interest rates, There
is no doubt that inflation rate will counting rising.
CONSUMER SENTIMENT INDEX - Current level is below 60 which reflects lower consumer confidence which will result in lower consumer spending
DOLLAR's PURCHASING POWER - U.S Dollar getting stronger against other fiat currencies, However it's purchasing power is eroding, High interest
rates have strengthened the U.S dollar and it's expected to continue rising.
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - Short term vs Long term treasury inflows, Whenever yield nears the
zero or becomes negative then recession follows.
Federal Funds Rate - Interest rates are expected to hit 3.75% by the end of this year, There will be several rate hikes in the following months that will result in global economic slowdown.
Geopolitical Risk - Disruption of world order has already begun with Russia's Invasion of Ukraine, Growing risks of China and Taiwan conflicts, Shri Lanka's Crisis, Turkey's Hyperinflation risk and if U.S economy crashes then a new world order is imminent.
Conclusion: Current Health status of U.S economy is bearable However, projection for upcoming quarter is uncertain,
the most optimistic part is low unemployment rates, Financially strong businesses and Strong households
with higher savings rate, in turns following rate hikes cannot be associated with an inevitable recession.
Health care and defense sectors with high dividend yield stocks are greater alternatives to invest in.
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