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Recession Ahead?

February 8, 2016

The case for a 2016 global recession is strengthening.

 

Economic patterns and data indicate weakness worldwide. European troubles, not to mention our own domestic issues, could shoot the global economy downward.

 

The European debt crisis has been a big issue, and quite frankly, a mess. The central bank has done lots of quantitative easing to stimulate growth. Despite that, the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) have been bailed out repeatedly, and austerity measures have proved unpopular and decreased consumer spending.

 

And not to pile on, but Italy is nearing yet another crisis, as its banks have serious issues. With $216 billion in “non-performing” loans and many banks unexpectedly failing in 2015, it only seems like things will get worse this year.

 

Consider this – even with deposit insurance to the tune of €100,000, more than 130,000 shareholders lost €800 million that wasn’t covered!

 

Clearly there’s a lot going on in Europe, but we haven’t even mentioned the potentially bursting bubble in China (that’s another blog post entirely).

 

But we’ve been through this before, right? I mean, 2008 was no cakewalk!

 

Well unlike then, central banks have little room to maneuver. In 2008 they could slash interest rates and expand their balance sheets. However, today that’s not an option.

 

Have these banks fired their last bullet?

 

Periodic recessions are normal in the economic ebb and flow. The last one was seven years ago. Is it time for another slowdown? Many signs point to yes. Hopefully we’ll be able to combat it.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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