Seeking Alpha
Profile| Send Message|
( followers)  
While debate over the likelihood of a recession seems to have picked up recently, we did a word search in The Wall Street Journal and The New York Times and found that occurrences of the term in those papers remain stuck near 18-year lows. Looking at the last two US contractions, we found that occurrences of 'recession' in both papers appear to be coincident with the onset of a recession, implying that they generally appear when most people aren't expecting them.

click charts to enlarge
recession06

Regardless of where one stands with respect to the direction of the economy, we created a chart which calculates the average performance of the S&P 500 before, during and after a recession (periods outlined below). As the chart details, the S&P 500 tends to peak roughly two months before the official start, and starts recovering about two thirds of the way into the recession.

recession2

recession3

Source: Recession and the Markets: Use of the 'R' Word at an 18-Year Low