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Do Not be Distracted from Your Plan by Recession Talk

by Keith J. Hardman

The current U.S. economic expansion that started after the global financial crisis troughed in June of 2009 is now, as of July, the country’s longest on record. Crossing the decade mark makes many analysts and policymakers think that this economic growth simply must be nearing its end. The very real possibility however is that this present economic expansion may linger on for a bit longer. Ironically, the current uncertainty in the markets (due to trade, etc.) might hold a silver lining by holding back investments and therefore possibly preventing, or at least delaying, the excesses that often occur in the late stages of an economic cycle. Banks, chief executives and investors are now more cautious about commitments of capital and this has actually helped reduce the market’s normal boom-bust behavior.

As my PMA colleague Jonesy Lerch stated in last month’s Partner Talk, “With inflation seemingly under control, the consensus is that a recession is unlikely in the near term.” Indeed there is little indication that the U.S. economy is on the verge of falling into recession, although, of course, recessions can commence with no apparent warning. While volatility in the stock market may continue to increase with lingering threats of trade wars and recent weak employment data, there are real indications that the economy can continue to expand for a significant period of time. One particularly salient reason for this conclusion is a persuasive argument that “financial cycles” last longer than the more traditionally conceived “business cycle.”

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