My City August 2022

MYFINANCES

To Recession or not to recession BY JOEL P. LAGORE, CFP® AIF®

If you have paid any attention to the media these last few months, there’s an inevitable event headed our way that they say could be detrimental. Everyone is happy to give their opinion and predictions about it and since so many people say it is coming, it must be true. at nasty little word is: recession. A recession has threatened to overtake our economy for a long time, probably even before the pandemic. I think we must gure out what exactly a recession is and how that aects our lives – espe cially our investment portfolios. Whenwe look at the textbook denition over the years, recession is often dened as two consecutive quarters of negativeGDP (Gross Domestic Product).But it has been changed by theNational Bureau of EconomicResearch (NBER) to include other factors such as employ ment, real income, industrial production andwholesale/retail sales. eNBER is the only group that can declarewhether we are in or had a recession. If we look at the oldway of determiningwhether our econ omy is in recession,GDP forQ1was -1.6%and it seems likely that in a fewweeks,wewill probably see a negativeGDP forQ2, as well. Recessions can be scary because of all their eects onAmerican businesses: slowing production, expensive borrowing, lower margins, layos, less in savings.Most people who have lived through a reces sion or two have been negatively aected or know someone who has been impacted by an economic slowdown leading into a recession.Re cessions are a very normal part of a business cycle, but they also vary greatly in severity and duration. emost recent was also the shortest one recorded. In February 2020, the economy stopped expanding and entered a recession, but by April 2020 that recessionwas already declared to be over. e longest recession in recorded history was the Great Depression,which lasted just under four years. Many recessions are not actually declared until they are over and the business cycle has begun to move to the expan sion phase. Where does the stock market fall in predicting a

recession? We consider it a leading indicator. If we are in a re cession right now, the stock market started pricing in the reces sion this past January. Oftentimes, the stock market prices into today what the news reports six months from now. e market is unsure as to what is going to happen to the entire economy when the Fed continues its course of raising rates to slow in˜ation and in turn, slows down the economy to mitigate the eects of in˜a tion, but often starts selling o in advance of mainstream media getting the information. As the Federal Reserve is raising rates, the long-term eects of these increases could likely be felt for the next few years, which is why we are hearing more and more saying that a recession is more than likely to happen in 2023. e Fed is attempting to do something that has rarely been suc cessfully achieved. e biggest variable that we’re still unsure of how it will aect us going forward is themassive stimulus package that was put into the economy over the past few years.Will this stimulus push us intomany years of growth or was it themain driver of the in˜ation we are currently trying to control?What we can say for certain is that there could likely be a recession sometime in the future, because they inevitably occur after any economic expansion. As theoldadage goes,“wedon’t knowwhatwedon’t know.”When it comes to the economy, there are just far toomany variables inplay.What we do knowis that toughmarkets don’t last,but tough investors do. ®

Joel P. LaGore, Certified Financial Planner and partner with OLV Investment Group, focuses on money man agement. Joining the Downtown Flint revitalization effort, his office is located in The Durant at 607 E. Second Ave., Suite 100. Joel and his wife Sonya are raising two daugh ters in Flushing, where he enjoys philanthropic pursuits in

his local community, in Flint at large and in Genesee County.

alphaspirit / stock.adobe.com

800.338.4586 olvinvest.com e Durant 607 E. 2nd Ave., Suite 100 Flint, MI 48502 jlagore@olvinvest.com Registered representatives o€er securities through AE Financial Services, LLC (AEFS), member FINRA/SIPC. Investment advisory services o€ered through OLV Investment Group, a Registered Investment Adviser. Insurance o€ered through OLV Investment Group. OLV Investment Group is independent of AEFS. 1961359 01/22 is content is provided for informational purposes only and is not intended to serve as the basis for ”nancial decisions. OLV Investment Group is an independent ”nancial services ”rm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Neither OLV Investment Group nor advisors providing investment advisory services through OLV Investment Group recommend or facilitate the buying or selling of cryptocurrencies.

80