The potential of a recession is being bandied about in many publications. Over the past several years, predictions about a recession seem constant. Articles point to the “inverted yield curve” —long-term bonds interest rates are lower than short term interest rates—as a predictor to a recession.
Predicting when a recession begins and ends is not an exact science and only historically are actual dates set. Are there clouds on the horizon? Sure. Will it be raining shortly? No one knows. People point to:
- Global trade war – companies are unsure where to invest so don’t spend the resources
- Slowdown in global growth
- Global currency markets
Before a recession occurs, it is important you review your asset allocation to determine if it is compatible with your upcoming goals and tolerance for risk. If you are comfortable with your asset allocation, when the recession comes you will know while an unpleasant emotional experience, your finances are in line to meet your future.
A fact to remember – since World War II, recessions have occurred in only 15% of the years.