S&P 500: Indicators Signal Rising Recession Risk

Summary

• The economy shows signs of weakening with rising unemployment, increasing consumer delinquencies, and a spike in business bankruptcies, indicating higher recession probabilities.
• Reliable indicators like the inverted yield curve, widening credit spreads, and outperforming consumer staples sector suggest a recession is likely within the next 12 months.
• Warren Buffett's Berkshire Hathaway is hoarding cash, signaling preparation for tougher economic conditions and potential opportunities to invest at lower valuations.
• The Fed faces a dilemma between controlling inflation and preventing a recession, with limited room to lower interest rates due to persistent inflationary pressures.

ZargonDesign

We have been in recession watch for some time, but so far, the economy has proven resilient. Admittedly, part of the reason has been significant stimulus in the form of government deficits and a lowering of interest rates by the Fed. A few months ago

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling shares, you should do your own research and reach your own conclusion, or consult a financial advisor. Investing includes risks, including loss of principal.