Thursday, June 20, 2024

A recession is the most likely outcome in 2024 – Russell Investments

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Adam Smigielski

Russell Investments argued Wednesday that a recession remains likely in 2024, despite recent signs of resilience for the U.S. economy. While it acknowledged progress in the Federal Reserve’s battle against elevated levels of inflation, the firm argued that lag effects from higher interest rates would most likely take hold next year.

“We think a recession in 2024 is possible and the most likely outcome.” Russell Investments stated. “We raised our near-term (12-18 month) recession probability to 55%.”

Many of the market experts predicting a soft landing have contended that the Fed is near the end of its tightening cycle and that the broader economy has already felt the majority of the economic impacts from higher interest rates. Russell Investments countered this by pointing to the long-term drag effects.

“We think investors should stay cautious and disciplined amid a likely (but not inevitable) recession in the next 12-18 months.”

Looking at Wednesday’s trading, a risk-off attitude prevailed in the premarket period, as the Dow (DJI), S&P 500 (SP500), and the Nasdaq Composite (COMP.IND), along with their mirroring ETFs (DIA), (SPY), (VOO), (IVV), and (QQQ) all looked ready to open trading in negative territory.

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