The Next Recession: Redditors Say It's 'Usually Right After The Fed Pivots And Starts Cutting Rates'

Zinger Key Points
  • r/wallstreetbets debates next recession's timing & causes, citing historical indicators & market conditions.
  • Redditors weigh in on rate cuts, inflation, & recession definitions, offering diverse insights on economic uncertainties.

Concerns about economic downturns are resurfacing, at least on Reddit.

With a chart depicting Treasury yield spreads, the post invited Redditors to weigh in on their predictions and insights regarding the possibility of a recession.

See below.

Broad U.S. equity market ETFs such as the SPDR S&P 500 ETF SPY, the iShares Core S&P 500 ETF IVV, the Vanguard S&P 500 ETF VOO often serve as barometers of the economic situation.

Also Read: Consumer Sentiment Worsens In April, Inflation Expectations Rise Further: Stocks Fall, Gold Surges Above $2,400

Insights from Redditors:

  1. Timing and Rate Cuts: User ElevationAV suggests that recessions often follow after the Federal Reserve pivots and begins cutting interest rates. However, RiskRiches challenges this notion, suggesting that weak market conditions typically precede rate cuts, leading into a recession.
  2. Causes of Recessions: According to Western_Objective209, most recessions are triggered by prolonged periods of high interest rates. Expressing concern about the current economic climate, they predict a recession within the next three months, citing flat inflation as a contributing factor.
  3. Market Expectations: Mountain-Bar-2878 speculates that markets would respond favorably to expected rate cuts if accompanied by a decrease in inflation. However, they anticipate a negative market reaction if rate cuts are prompted by unforeseen economic disruptions.
  4. Interpreting Recession Definitions: Redditor RoundTableMaker highlights the complexity of defining a recession, distinguishing between stock market downturns and economic recessions. They note that while the stock market experienced a downturn last year, it did not correspond to an economic recession.

As Redditors engage in discourse about the probability of a recession, varying perspectives emerge regarding the timing, causes, and potential market implications.

Some Reddit users anticipate a looming recession, citing historical patterns and current economic indicators. Others remain cautiously optimistic about the resilience of the markets.

As discussions evolve, insights from online communities like r/wallstreetbets provide valuable perspectives for investors navigating uncertain economic terrain.

Read Next: Never Mind Jerome Powell? Bullish Analyst Predicts Over 3 Rate Cuts This Year, Calls Recent Inflation Spike ‘Statistical Aberration’

Image: Shutterstock

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