By: Dividend Sensei
With record deficits and a bloated Fed balance sheet, there is real concern about what our government can do to fight the next recession. Since one appears to be getting closer here’s what investors need to know about what DC can and can’t do when the next downturn hits.
- Thanks to historically low interest rates and a sky-high budget deficit many worry that the Fed and Federal Government won’t be able to fight the next recession.
- It’s true that rates being cut by half their usual amount, and a paltry likely future fiscal stimulus won’t be able to pack much growth boosting oomph.
- However, the next recession is likely to be a typically mild one, and thus even “pushing on a string” should be able to end it within 15 to 18 months.
- The current risk of a recession are very low and one is not likely to begin this year.
- The most likely start date for the next recession is 25 months, with a bear market most likely to begin in about 17 months. Thus, there is no reason to become extra defensive right now.