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“The 2022 buzzword was recession,” said Douglas Boneparth, a certified financial planner based in New York. “And here we are in 2023 with a myriad of economic data suggesting otherwise.”
Boneparth, who is president of Bone Fide Wealth and a member of CNBC’s Financial Advisor Council, said data like the strong labor market and falling inflation isn’t pointing to the economic downturn experts predicted.
The U.S. Bureau of Labor Statistics reported annual inflation fell to 3% in June, and the July unemployment rate was 3.5%, just above the lowest level since 1969, according to the U.S. Labor Department.
Of course, with recessions notoriously difficult to predict, even for economists, advisors have warned clients about making fear-based investing decisions.
Recession ‘highly unlikely’ in the next 12 months
One definition of a U.S. recession is two consecutive quarters of negative gross domestic product, or GDP, which happened during the first two quarters of 2022. Subsequent quarters have been positive.
But that 2022 slump hasn’t been called a recession by the National Bureau of Economic Research, the organization that marks the start and end of economic downturns, explained Atlanta-based CFP Ted Jenkin, founder of oXYGen Financial.
Plus, “wages are still growing and retail sales are still growing,” said Jenkin, who is also a member of CNBC’s FA Council. “The odds of a recession in the next 12 months are highly unlikely.”
The odds of a recession in the next 12 months are highly unlikely.
Founder of oXYGen Financial
‘We constantly educate our clients’
Whether the economy is heading for a mild recession or soft landing, experts emphasize the need for ongoing client education.
“Sometimes we have recessions when you least expect it, and then you have booming economies when you least expect it,” said Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida. She is also a member of CNBC’s FA Council.
“We constantly educate our clients and make them prepared for whatever the world’s going to throw their way,” she added.