Nearly 4 in 5 Advisors Say the U.S. Economy is in Recession or Will Recession in 2023 – 2023 Survey

Financial Planners


SmartAsset: Nearly 4 in 5 financial advisors say the economy is in recession

SmartAsset: Nearly 4 in 5 Financial Advisors Say We’re in a Recession Right Now

Americans are not in a recession, according to the official definition of a recession1But despite what many economists say, Trench advisers see it differently.

In a survey of nearly 200 financial advisors participating in SmartAsset’s SmartAdvisor matching platform, nearly 77% of advisors said Americans are in or will soon experience a recession . Here’s why they’re eyeing a potential recession and the moves they recommend individuals take to strengthen their finances.

It is important to minimize the impact of the recession on investment portfolios. Find a financial advisor to help you today.

Nearly 77% of financial advisors say they are in a recession now or will soon

When asked, “Do you expect the U.S. economy to enter a recession within the next 12 months?” nearly 46% of advisors surveyed said yes, and about 31% said they are already in recession. They answered that they think they are. Nearly 15% of respondents said they are not currently in a recession and do not believe there will be one within the next 12 months. Additionally, approximately 8% of respondents selected “Other, please specify” for more detailed analysis.

Responses from advisors in this survey mirror sentiment from previous SmartAsset surveys. In August 2022, SmartAsset conducted a survey asking advisors if they saw signs of a US recession heading into recession. At the time, 43% of advisers said yes, and 37% said the economy was already in recession.

The survey responses last August came after the US government said gross domestic product (GDP) had fallen by 0.9%, marking the second straight quarter of negative GDP. When there are consecutive quarters of negative GDP, some analysts classify it as a recession.

Inflation reached 9.1% in June 2022, which did nothing to ease recession fears. Additionally, the S&P 500 and the Dow Jones Industrial Average (DJIA) plunged.

Since then, US GDP has delivered positive growth in the last two quarters of 2022. Inflation has also leveled off. But despite these signs of economic boom, advisers still expressed concern about the possibility of a recession.

Why Advisors Say They’re Seeing Signs of a Recession

Rising interest rates, high inflation, and the recent collapse of several banking institutions were cited by many of those who said a recession was coming or was coming soon.

One respondent said, “I believe that higher interest rates will cause some kind of recession to fight off the inflation problem.”

“Rising interest rates were pushing us in that direction. I think the banking crisis will push us to the brink,” said another.

One survey respondent said the strength of the U.S. workforce and consumer base would make any recession within the next 12 months short-lived.

“We expect the economy to enter a recession by 2024 (first quarter), but a mild recession driven by higher borrowing costs and a tighter money supply,” one respondent said. “Thanks to a strong workforce and resilient consumers, we will emerge from this situation fairly quickly.”

Advisors who answered “other” had a variety of reasons. One predicted that there would be a recession, but not a full-blown recession. Another predicted a recession in two years instead of one.

Advisors say how Americans should prepare for recession

To prepare for a potential recession, some advisers have encouraged Americans to rake in additional funds for emergency spending and ensure they delay unnecessary purchases.

“The strategy is to increase (and) maintain cash reserves, own higher quality assets (both stocks and bonds), and limit the amount of discretionary spending (i.e. jet ski purchases We can wait a few more months,” one adviser replied. .

Some advisers suggest investors take advantage of current Certificate of Deposit (CD) rates while adding quality assets to their portfolios.

Another adviser wrote, “Increase your short-term cash bucket.” “Continue to invest and save while realizing that you can buy at a discounted price compared to years past.”

Conclusion

More than three-quarters of advisors surveyed by SmartAsset said they are currently in a recession or expect to experience one within the next 12 months. Some advisers advised individuals to bolster their cash reserves and investment savings for a recession.

methodology

The survey data for this report was collected by SmartAsset between March 29, 2023 and April 12, 2023. SmartAsset asked financial advisors, “Do you expect the US economy to enter a recession within the next 12 months?”

Of the advisors surveyed, 197 responded to this question.

SmartAssets also asked “Please describe your belief that a recession will occur within the next 12 months” and “If you expect a recession within the next 12 months, how will you prepare your clients? Would you like to give me advice?” he asked.

1National Bureau of Economic Research (NBER)

Recession investment tips

  • One of the benefits of working with a financial advisor is that you have someone who can help soften an investor’s emotional reaction to economic uncertainty through objective analysis. Finding a qualified financial advisor is not that difficult. SmartAsset’s free tool matches you with up to 3 financial advisors serving your area and allows you to meet with advisors for free to determine which one is right for you. increase. If you’re ready to find an advisor to help you reach your financial goals, start now.

  • SmartAsset’s free asset allocation calculator makes it easy to estimate the best way to adjust your investment portfolio given your timeline and risk profile.

Questions about our research? Contact press@smartasset.com.

Photo credit: ©iStock.com/izusek

The post says nearly 4 out of 5 advisors say the U.S. economy is in recession – or will be in recession within 2023 – survey first appeared on the SmartAsset Blog it was done.

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