1 in 3 chance of recession this year, Bloomberg says – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Content
    • Webinars
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • NewsWires
  • Magazine
  • Free Newsletters
  • Insider
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Advisor News
Top Stories RSS Get our newsletter
Order Prints
July 5, 2022 Top Stories No comments
Share
Share
Tweet
Email

1 in 3 chance of recession this year, Bloomberg says

Chances for recession increase, says Bloomberg.
By Steven A. Morelli

In the latest hint of a coming recession, Bloomberg’s probability index popped up for the first time since the 2020 crash.

Since May 2020, Bloomberg’s economic model has shown 0% probability of a recession occurring in the next 12 months. The probability has shot up to a 38% chance, according to an update this morning.

Chances for recession improve.

The change was linked to a record low in consumer sentiment and a surge in interest rates. Analysts said the gauge used factors ranging from housing permits and consumer survey data to the gap between 10-year and three-month Treasury yields.

“The risk of a self-fulfilling recession — and one that can happen as soon as early next year — is higher than before,” said Anna Wong, chief US economist at Bloomberg Economics, in a post. “Even though household and business balance sheets are strong, worries about the future could cause consumers to pull back, which in turn would lead businesses to hire and invest less.”

If a recession does not occur in the next 12 months, we are still at risk: Bloomberg economists pegged the chances of a recession by the start of 2024 as three in four.

One of the heaviest drags is consumer confidence, which is at a 45-year low, according to the University of Michigan’s consumer sentiment poll. Survey director Joanne Hsu linked the drop to soaring inflation.

“While consumers still appear relatively optimistic about the stability of their incomes, their perceptions of the economy are much more strongly influenced by concerns over inflation,” Hsu said. “As higher prices become harder to avoid, consumers may feel they have no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether. The speed and intensity at which these adjustments occur will be critical for the trajectory of the economy.”

Labor Still Strong Though

A key problem with spotting a recession is it is a backward-looking phenomenon – we don’t know we have a recession until we have had it.

Generally speaking, recession is defined as two consecutive quarters of negative economic growth. One of the confounding factors in sizing up chances for a recession is they always involve job loss, which is still at historic lows with no sign of an uptick.

Some argue that as the economy slows down, job losses will follow, providing that typical recession component. But every recession is different, and “different” is the new normal.

JP Morgan acknowledged the unemployment factor but wondered aloud if that really mattered if consumers were experiencing pain of recessionary proportions. In an article headlined “The recession everyone sees coming,” Jacob Manoukian, the U.S. Head of Investment Strategy for J.P. Morgan Private Bank & Wealth Management, said inflation is as painful as job losses and business failures.

In Manoukian’s estimation, conditions are already looking recession-like.

“Evidence is mounting that a growth slowdown is already well under way,” Manoukian said, citing a cooling housing market and Purchasing Manager Indices. “The latest data give credence to the idea that a self-reinforcing downturn may be already happening.”

Manoukian said JP Morgan was suggesting three things clients can do leading into a recession.

Core fixed income: “Given the rally in fixed income markets this week, aggregate bond prices are in their best stretch of the year. If recession red flags continue to pop up, bond yields will likely fall further.”

Quality equities: The best equities are the best way to outperform in this environment. “We are looking for fortress balance sheets, high barriers to entry, reasonable valuations and steady cash flow streams. “

Volatility advantage: Investors can lean into the volatility by using options. “As always, tactical investors can look for dislocations in volatile markets.”

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected]l.com.

© Entire contents copyright 2022 by InsuranceNewsNet. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.

 

 

Older

Survey: Pandemic cracked many retirement eggs

Newer

Regulation and service excellence don’t have to be opposites

Advisor News

  • How ‘Advocate Clients’ can grow your practice
  • Inflation Reduction Act won’t reduce inflation. That’s just one of its faults
  • Why savings interest rates aren't Increasing like loan interest rates
  • Parkland man pleads guilty in $21 million gaming app investment scheme
  • Two men accused of defrauding nearly 100 investors of millions of dollars
More Advisor News

Annuity News

  • Global Atlantic announces $10B group annuity reinsurance deal with Equitable
  • Colorado adopts new annuity sales regulations
  • National Western Life introduces new fixed indexed annuity, NWL New Frontiers
  • Jackson National announces second quarter 2022 results
  • Brighthouse Financial adds to Shield Level annuity suite with new product
More Annuity News

Health/Employee Benefits News

  • Experts: Inflation Reduction Act keeps health care premiums low in West Virginia
  • MaineHealth and Anthem settle long-running contract dispute
  • Cabell Huntington Hospital agrees to nearly $5.7 million lawsuit settlement with some retirees
  • Watch now: Wisconsin officials call for more monkeypox vaccine, WHO considers renaming virus
  • Lawsuit could end free preventive health checkups
More Health/Employee Benefits News

Life Insurance

  • FinFit, Hancock partnership a marriage of physical, fiscal fitness
  • Susan Neely of ACLI wins ASAE leadership award
  • Evidence dispute spills into public in Alex Murdaugh case
  • Sammons names Tyler Brown new government affairs director
  • Task force weighs ‘limited’ revision of life insurance illustrations model
More Life Insurance

- Presented By -

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

FEATURED OFFERS

Get Linked INN to your industry Connect with INN on LinkedIn to be first on all the news and insights that matter to your industry.

Press ReleasesAll press releases

  • Ibexis Life & Annuity Insurance Company Launches Innovative Fixed Annuity
  • National Western Life introduces newest fixed indexed annuity, NWL® New Frontiers
  • CybeReady Supports Security Defenses with CISO Toolkit
  • Life and Disability Income Insurance Products from MassMutual Now Available on iPipeline®’s End-to-End Digital Platform
  • Business on the Go with The Crump Mobile App
Add your Press Release >

Topics

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Content
  • Webinars
  • Monthly Focus

Top Sections

  • Life Insurance
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2022 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your INNsider Account

Not registered? Become an INNsider.