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Everyone is already planning for it - the recession. 

Growth is slowing down, inflation is through the roof, and it is not planning to come down. Job losses are slowly happening, and spending is slowing down. 

But what if those things are not the case? 

What if we are not going into a recession? 

We all know that the GDP reports get adjusted for years post they get reported. 

What if investments stay strong? 
What if there are slower losses in retail items than what is estimated? 
What if the spending on services starts growing? 
What if real estate investment slows down? 
What if the government starts buying more goods and services than expected? 
What if we start exporting more than expected or we import less than planned? 
What if the inventory is less than expected? 
What if these current inflation rates are overestimated?

What If We Are Not in Recession?

Owner Equivalent Rent (OER) is a significant aspect of inflation, but the data needs to catch up by about 8 months. In other words, the inflation level is more reflective of where the housing prices were in February, with the 30-year mortgage rate hovering at 7%, but does anyone think that February's prices are equivalent to today? 

It is clear that we may be going into a recession, but that is not the question to be asked. The inflation should not be very high. The thought process here is that everything is suggested that the world is going into recession is not the written word. 

Financial analysts are stating that what is more evidence of the world turning to a recession may, in fact, be wrong or less correct.

The explicit suggestion is that the stock market is defeated when it is defined by a specific time period. 

If you remove the context of time, the concept of recession remains undefeated. 

You need to know what the money is for and when it is required. If you do not need the money within the next 18-24 months, then create and hold the portfolio you want in the recovery stage rather than building your portfolio from scratch. 

Because what if something happens that you think is going to happen is actually wrong? 

So, ask yourself what happens to the market when the GDP gets revised upwards, or inflation comes down faster than the monetary stimulus bleeds off? 

But so far, NBER or the National Bureau of Economic Research, a self-appointed authority that calls the start and end of economic recessions, has also been silent on whether we are going into recession or not. 

Surprisingly, this debate has pushed people to two opposite sides - one commenting that we are not going into recession, while the other claiming that we are already in the midst of it. 

Economic data is a little hazy when it comes to this topic, and interpretation is open from both sides. But, while everyone agrees about the negative GDP rates, a closer look at the numbers reveals a complex economic situation. To start with, the 1.6% Real GDP contraction experienced in the first quarter was due to the 20% surge in imports. This surging import is not a sign of a recessive economy, and consumer spending increased by 1.8%. 

Similarly, the second-quarter GDP would have remained stagnant if there had not been a depletion of inventories that removed 2% from the total numbers. Again, the shortage of stocks means that people were buying more - not an indicator of a recession. 

So, the economy seems much stronger than the previous negative GDPs suggest. Here are 3 more reasons why the world is not moving into recession:

Reasons Why World is Not Moving Into Recession

  • Increase in corporate earnings: The negative profit growth does not mean that the economy is moving into recession but the opposite. An economy going into recession will show negative earnings growth. But profits grew in the last five quarters, and over 75% of companies reported a higher second quarter.

  • Good labour conditions: This is the best way to see whether the economy is experiencing a recession. In the job report for the USA in July, more than 470,000 jobs were created in the private sector. This is well above expectations, with a significant upward revision of the prior months. The jobless rate is just 3.5%. This means that the number of job openings, compared to the working population's percentage, has been at its highest in the last 20 years. 

  • Substantial levels of consumer spending: There has been substantial growth in consumer spending in the last quarter. For example, factory orders are at the top of the 30-year range. Retail sales are predicted to stay close to record levels in the way they are measured - as a percentage of GDP. 

But despite all this information, the data is declining fast. This suggests that a recession is inevitable. 


The economy always sees ups and downs, and just as the inflation that has been happening for the previous quarters, the recession is bound to happen. But the main question is how to protect yourself financially if it happens. Check your portfolio and make yourself economically unbreakable so that you do not get affected too badly due to the recession. 

About Author

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Founder & Managing Director of Investor Diary

I, Vishnu Deekonda, am dedicated to providing the proper financial education to every individual interested in becoming financially independent through intelligent investments.

I have trained people to build financial independence and observed people had got many myths about investing for beginners. I want to prove to such individuals that these myths are the bottlenecks to a successful trading portfolio. I wanted to share the knowledge I have gained through a decade of experience with the people willing to build a healthy stock return with less or no risk.

I am a course creator for InvestorDiary and am on a mission to provide every course one needs to master to build a healthy portfolio for stocks. I shall also be sharing courses on IPOs, mutual funds, stocks trading and other core areas of investing crisply and clearly.

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