Fisher Investments Reviews Key Economic Recession Indicators

Summary

In this video, the speaker reflects on the potential for future recessions, drawing on over 50 years of experience. While acknowledging that a recession is inevitable, they emphasize that a rising stock market is not compatible with the start of a recession. The speaker explains that a downturn typically follows after the stock market begins to fall, not while it is still rising. With the global economy in a stable phase post-Covid, they caution against focusing on common economic concerns, instead advising attention to overlooked factors. No immediate recession is expected, but 2025 could bring changes. The speaker encourages staying informed and vigilant.

Takeaways

• 😀 The speaker predicts multiple recessions in the future, emphasizing the uncertainty around timing and causes.
• 😀 The 2020 contraction was not considered a recession, but rather a government-induced event.
• 😀 In over 50 years of experience, the speaker has lived through 7 or 8 recessions and expects 2 to 3 more in the next 20 years.
• 😀 Stock market trends are a powerful indicator of recession timing—rising markets make a recession unlikely, while falling markets signal potential downturns.
• 😀 Historically, no recession has started during a period when the stock market was high and rising.
• 😀 The stock market must experience a decline over several months before a recession can begin, even though declines don't always lead to recessions.
• 😀 Economic indicators like rising unemployment in 2024 were misinterpreted as signs of a recession, but the rising stock market contradicts such claims.
• 😀 The stock market’s performance is an essential tool for forecasting, with rising markets suggesting no immediate recession.
• 😀 The speaker focuses on economic factors that people are not paying attention to, suggesting that hidden risks are what drive recessions.
• 😀 Current global economic conditions are stable and moderately positive, with few immediate concerns, but it's important to keep watching for future changes.
• 😀 Government actions, especially poor decisions, are a concern but don't typically cause recessions unless they lead to unspoken risks in the economy.

Q & A

What does Ken Fisher predict about future recessions?

Ken Fisher predicts that multiple recessions are likely ahead, though he finds it difficult to pinpoint their exact timing. He has lived through several recessions in his 50+ year career and expects 2-3 more in the future.

How does Ken Fisher distinguish between a recession and a contraction?

Fisher considers the 2020 downturn a government-induced contraction rather than a classic recession. He believes it was caused by government actions rather than the usual business-cycle factors.

What is Ken Fisher's view on the role of the stock market in predicting recessions?

Fisher argues that the stock market is a powerful leading indicator of recessions. While a market decline of 20% or more often precedes a recession, recessions do not begin while the stock market is still rising. This makes rising markets a sign that recessions are not imminent.

Can a recession occur while the stock market is rising?

No, according to Fisher, recessions never start when the stock market is rising. This is an important historical pattern, and to suggest otherwise would require a very unusual reason.

What indicators does Ken Fisher focus on to predict economic downturns?

Fisher emphasizes the importance of watching for subtle economic shifts that are not widely discussed, such as negative lending activity or a shrinking money supply. These indicators can point to underlying economic problems.

What does Ken Fisher say about government debt and its relation to recessions?

Fisher notes that while government debt is a common concern, it is not typically a direct cause of recessions. He believes that the public's focus on government debt often overlooks more significant and less discussed economic risks.

What was the impact of the Covid contraction on the economy, according to Ken Fisher?

Fisher views the Covid contraction as a catalyst for significant 'house cleaning' in businesses, where excesses from the prior economic expansion were addressed. This process helped extend the life of the bull market and contributed to economic recovery after Covid.

Does Ken Fisher see any immediate threats to the global economy?

As of now, Fisher does not see any immediate threats to the global economy. While he acknowledges potential risks, he believes that the economy is functioning in a normal and stable manner after the extreme disruptions caused by Covid.

What could lead to a recession in 2025, according to Ken Fisher?

Fisher believes that a recession in 2025 is possible, but not likely to happen early in the year. He stresses that the stock market is currently performing well, suggesting that a recession is not imminent.

What does Ken Fisher recommend people focus on when evaluating economic conditions?

Fisher advises people to focus on the economic factors that are not being widely discussed, such as unusual shifts in lending or money supply, rather than the commonly debated issues like government debt.