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Will there be a recession in the next year?

If you’ve watched or listened to the news recently, you may believe a recession is inevitable in the next 12 months. Between the escalating trade war with China and slowing global growth, rumors of a recession are everywhere. Although the recent 2 year/10 year yield curve inversions have spooked the markets, Vanguard doesn’t expect a recession in the next 12 months.

According to Vanguard’s recent market prospective, all signs point to central banks lowering interest rates again in 2019, with the magnitude dependent on the shape of the yield curve. As seen over the years, interest rate changes have been an indicator of the state of the market. Thus, Vanguard puts the chance of a recession over the next 12 months at 40%.

Looking internationally, softening global growth is expected to continue over the next year which is driven by a slowdown in growth with Chinese economies and the high tension of the US-China trade war. In the euro area, Vanguard has lowered their forecasts slightly as manufacturing activity continues to contract.

Despite some signs pointing to a recession, Vanguard is optimistic that a recession will not occur in the next year. Although international news seems to be unfavorable, the US consumer is still holding strong with key market stability indicators including low unemployment rates, low inflation, lowering interest rates and good savings rates. These factors all contribute and continue to fuel our robust economy.

Even though downturns are typically associated with negativity, they are not rare market events since fluctuations have always been a sign of a healthy market. In fact, the typical investor will endure many market downturns in their lifetime. There has been at least one attention grabbing downturn every TWO years since 1980. Our advice if a recession happens, or with any market change, is to stay the course and avoid short-term market jitters.

One attention-grabbing downturn every two years:
12 corrections
Decline of 10% or more
8 bear markets
Decline of 20% or more, at least 2 months long

Source: Vanguard analysis based on the MSCI World Index from January 1, 1980, through December 31, 1987, and the MSCI AC World Index thereafter. Both indexes are denominated in U.S. dollars.

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Happy Birthday to Kylie, our Marketing Assistant! Kylie works hard behind the scenes on our website, podcast, social media, and so much more.

Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

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Your Medicare premium is affected based on which tax bracket you fall within after age 63. IRMAA is your income-related monthly adjustment amount. Watch today's video to learn more about how IRMAA works.

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The big question is, will we have a recession in 2022? Watch this video to find out!

https://conta.cc/3Mz2z7D #recession2022 #recession
https://youtu.be/45TvHaZf4z4#recession2022

Happy birthday to LJ our Video Production Manager! LJ works behind the scenes producing all of our podcasts and videos that we post every week. 🎉

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