As 2023 draws to a close, a media storm has swirled around the concepts of both hard and soft economic landings and the potential for a recession. The truth remains elusive as to whether a recession looms on the horizon, but it’s clear that service-related inflation has proven more persistent than Central Banks anticipated. With rising interest rates, a larger portion of household earnings is now being allocated to mortgage payments andent.
Investors are often spooked by the mere mention of a recession, yet historical data suggests that periods of economic downturn have frequently led to gains in share prices. In Australia, for instance, the stock market has seen growth during most recessions. This pattern holds true for the U.S. stock market as well during American recessions.
The United States has hinted at a possible decrease in interest rates in the upcoming year, which might be an early warning sign of an impending recession. A notable contrast between the U.S. and Australia is the depletion of U.S. household savings, while Australia’s savings still have some way to go. This situation may result in prolonged elevated interest rates in Australia or a more cautious approach to reducing them.
Following is an article that highlights the main areas to consider as we head into 2024.
https://www.macrobusiness.com.au/2023/12/australian-households-batten-down-for-recession/
Disclaimer: This may contain general advice. It does not take account of your objectives, financial situation or needs. You should talk to a financial adviser before making a financial decision. This has been prepared by Dollar Growth Financial Advice Pty. Ltd. refer to the Financial Services Guide for details. While care has been taken in the preparation of this, no liability is accepted by Dollar Growth Financial Advice Pty. Ltd., its related entities, agents, representatives, employees for any loss arising from reliance on the information contained herein.
