Recent Recession Talk

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    What are your thoughts on the recent articles predicting a recession based on deficit and unemployment numbers?

    TS Paul

    The huge amount of new spending which is ballooning the deficit is a concern. Congress has essentially created a huge stimulus program at exactly the wrong time and created conditions in which the economy could become overheated. That hasn’t happened yet, and it may never happen if the Fed keeps pumping the brakes in the form of interest rate hikes.

    The unemployment numbers remain stellar. The concern here isn’t that the numbers show a danger of the economy contracting, but again that with labor in short supply that wages will grow too quickly and create excessive inflation, leading to the whole thing tipping over into recession. Wage growth remains moderate at this point, so I don’t see that as a major worry in the near term.

    If something is going to cause major problems in the near future, I believe it will be Trump’s budding trade war getting out of control.

    The TSP Allocation Guide

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