Risk of a Recession May Be Higher Than You Think

Q1 profits expected to decline by 9%, according to FactSet

by Anora Mahmudova
Market Watch

Bear markets — a drop of 20% or more from peak to trough — almost always require an economic recession, which are always preceded by a profit recession.

The question on every investor’s mind is whether the current earnings recession will cause the whole economy to contract. The consensus, which includes the Federal Reserve, is that the weakness in economic growth is temporary and we are not headed into a recession.

But foreseeing a recession with a reasonable accuracy has eluded economists so far, even though in hindsight there have been numerous telltales.

Problems with seasonality and multiple revisions to numbers mean that by the time a recession is confirmed, we are already smack in the middle of it.

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