Re-Framing the Next Downturn

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“It feels like people have been worried about the next recession every day since the last one was over. I get it. Recessions aren’t fun. But you can’t constantly remain in the fetal position simply because you know the economy and markets eventually have a downside.

If you would have told me in 2009 the following would be true today I probably would have called you a liar:

  • The unemployment rate is 3.7% (down from a high of 10% in 2009)
  • Inflation is basically non-existent (despite unprecedented monetary policy actions from the Fed)
  • U.S. government bond rates have remained subdued (despite an explosion in the deficit and a credit rating downgrade in 2011)
  • Oil prices are down roughly 60% (from over $120/barrel in 2011)
  • The stock market has quadrupled (from the lows in March 2009)
  • There are trillions of dollars of negative-interest yielding bonds around the globe
  • We are now in the longest-running economic expansion in modern U.S. history

In comparison to 2009 when the world was seemingly on the precipice of falling apart, things are pretty great in terms of the markets and economy right now. But because the Great Financial Crisis of 2007-2009 was so severe, investors have been worried about the next recession since the day it ended. “

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