What Everyone Ought To Know about Why Is this Recession Unique?

This recession is unique as the inflationary pressures run high with central banks pacing to hike interest rates, but the employment is also high, and unemployment is low for an actual recession. People have still got good reasons to invest and obviously, Markets are pricing in that information, going against all previously held norms. According to data, most corporations hold more liquidity to fare them through a grim period hence they are buying. 

Alas! Yield Curve has inverted. 

The best indicator for predicting a recession, the yield curve inversion has already been priced in by the markets it seems. Still, the excess liquidity in the US Market has fueled consumption demand even in the worst inflation of the decade. Hence, even after counting in the danger of a recession, the Fed is still Hawkish. 

US Yield Comparison

Cool Equities 

In a typical recession stock markets suffer the worst and it takes time for them to recover. But inthecurrent scenario, Stock markets have driven up, S&P500 up by 14%, DJ 30 up by 10.6%since thelast swing low on 17 June, even after rate hikes, which means the Market had already discountedthefear of recession due to rate hikes. 

The War impact had already been priced in by the markets and now the effects are cooling down on stock markets.

S&P500

DJ30

Employment

An important sign of a recession is a vicious cycle of low or negative growth which increases unemployment in the economy, but currently, the US market has seen a fairly strong Labour demand. A sociological aspect is a generational change where the old generation is retiring andthenew generation is looking for “dignified” and high-paying jobs. Hence the labour is short thanits demand. 

This was proven by the recent data of Non-farm payrolls which turned out exorbitantly high, 528Kinstead 250K, signalling a robust labour market in the US. The average hourly earnings have alsoincreased which will improve the demand in the economy. 

This strong demand in the market, has made Fed to increase rates confidently. Further, data driven hikes are still going to happen. We will wait eagerly for this outstanding phenomenon to unfold. 

A lot more aspects can be discussed for such a happening. Stock markets are still good for such multi-dimensional assessment. The geopolitical happenings might pose another question on the economic rise amid this unique recession.