There’s No Avoiding the “R” (i.e., Recession) Word

Posted in , By David Robinson

The inversion of the 10-year/2-year interest rate yield curve last week triggered renewed concerns about a potential U.S. recession, not to mention the worst U.S. stock market day of 2019. Understand that more than a few respected economists question whether an inverted yield curve is still a valid recession predictor. Nevertheless, the inversion/bad stock market day spooked investors and appeared to motivate President Trump, who knows that his re-election chances hinge on a growing economy. He is now exploring additional tax cuts to stimulate the economy and has renewed his ferocious demands that the Fed lower short-term rates sharply and quickly.

Here is our take. The U.S. economy continues to grow, albeit slowly, and is not in a recession or in imminent danger of a recession. Slow GDP growth, around 2% annually may be the best that we can reasonably expect from the U.S. economy without exceptional monetary or fiscal stimulus. Employment is healthy. Consumer spending, the biggest contributor to the economy, continues to be strong. Business spending is slowing, which we attribute to uncertainty about trade issues and tariffs. This is a concern because we do not see the trade conflicts going away this year or next, unless President Trump basically capitulates to China in the interest of self-preservation.

We expect the Fed to be accommodative to re-stimulating the U.S. economy. All things considered, we do not predict a recession in the next 12 months. Beyond that time frame, the odds of a recession are higher, in large part because the unknowns in a dynamic global economy go up. Economic “crystal balls” don’t work particularly well beyond 12-18 months. Recessions are notoriously difficult to predict. We’ll stay vigilant.

In addition to recession and economic talk, we came across some intriguing articles that we are excited to share with you: Maine ranks first in women’s rights; some CEOs are expanding their job descriptions; meditating on kindness and compassion may slow aging; a simple way to improve cognitive performance; and having fun with a personality test. Some good stuff if I say so myself!

  • Goldman Sachs Lowers Growth Forecast: Goldman Sachs now forecasts the U.S. to grow 1.8%, down from 2% in the 4Q of this year, due to trade concerns. This is only one predictive data point, but we pay extra attention to GS research as the quality is high. (CNBC)
  • Trump Getting Concerned? President Trump touts the great economy but appears to be hedging his bets by looking at additional tax cuts.  (New York Times) (YouTube)
  • Importance of Business Confidence: Trump’s trade policies are chilling business confidence. We think he has underestimated this dynamic. (New York Times)
  • Maine Ranks First for Women’s Rights: Considering workplace environment, education and health and political empowerment, Maine came in first! (
  • Top CEOs Looking Beyond Profits: The Business Roundtable has stepped forward to say that “business leaders should commit to balancing the needs of shareholders with customers, employees, suppliers and local communities.” This is significant. Historically, many CEOs have viewed their roles almost exclusively as serving shareholder interests. (Washington Post)
  • Meditate on Kindness and Compassion and Live Longer? The meditators among you may be familiar with the practice of “loving-kindness” where the meditator practices feeling kindness and compassion for themselves and others. A University of North Carolina study of women meditators now shows that this type of meditation practice may slow aging at the genetic level by maintaining the length of genetic “telomeres”. Telomeres typically shorten as we age and are an important marker of aging. (ScienceDirect)
  • Stop Multitasking to Improve Cognitive Performance: A Stanford study indicates that multitasking degrades working memory which in turns hurts cognitive performance. It surprises me how challenging it can be to focus totally on one task for an extended period. Even driving without listening to music, the radio or a podcast takes getting used to. (
  • A Valid Personality Quiz? We all should be skeptical of personality tests, as most are not validated by objective data. But there is data to back up the so-called Big Five which tests for “openness to experience”, “agreeableness”, “conscientiousness”, “negative emotionality” and “extraversion”. Show me yours, and I’ll show you mine! (

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About the Author David Robinson

A wealth advisor with more than 25 years of experience in the financial field, Dave serves as Robinson Smith Wealth Advisors’ Co-Chief Investment Officer and is a Co-Managing Member of the firm. As a Certified Financial Planner® and non-practicing attorney, he provides clients with deep expertise in areas including investment management and retirement planning.
Disclaimer and Disclosures: Past performance is no guarantee of future results. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Our opinions are subject to change without notice as market and economic conditions shift. Robinson Smith Wealth Advisors, LLC is a Registered Investment Advisor with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any certain level of skill or training. Personalized financial planning and individual investment advice are not offered through this website. The general financial and investment information furnished through this website or associated with this website by links is believed to be accurate, however, Robinson Smith Wealth Advisors makes no guarantee to this fact and does not have control over the accuracy of websites found through links within.