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Are we on the road towards another recession?

I told myself I wouldn’t mention rising inflation, geopolitical unrest and unending supply chain strife this week, but alas, here we are. All of these issues and more have conspired to bring that which we dare not speak about back to the fore again…

The word on everybody’s mind: recession.

This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.

Is a recession on the way?

A red-hot US economy has seen unemployment rates fall and prices continue to rise, leading many — including institutions like Deutsche Bank — to predict a recession. Similarly, recessionary fears are also swirling around Europe in light of the current ongoing invasion of Ukraine by Russian forces and the impact it will have on energy supplies.

A recession is defined as “a significant decline in general economic activity in a designated region, typically recognized as two consecutive quarters of economic decline in a country’s GDP,” according to Investopedia. They’re an inevitable and unavoidable part of economics, but catastrophic events such as 2008’s infamous crash have turned ‘recession’ into a taboo word.

It’s important to remember that there have been 48 recorded recessions since the formation of the US. Investors have — and will — survive these times of turmoil if they follow the same rules we advocate for to create long-term wealth.

With a long-term, buy-and-hold strategy, the threat of a recession can be turned into an opportunity by picking up bargains as the hordes panic-sell Downturns are inevitable — both in the economy and in investing — but losing money doesn’t have to go hand in hand with that.

The news headlines are likely to begin filling up with talk of shock: supply, inflationary and recessionary. Things will unfortunately get a bit worse before they get better. Just make sure to remember your horizon, trust in your long-term plan, and weather the storm to emerge in an even better financial situation.

 

MyWallSt gives you access to over 100 stock picks, as well as providing free analysis, multiple podcasts, customised market updates straight to your phone, and much more. Sign up for free today.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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