We see a mid-cycle slowdown, but upside on the horizon

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Q1 2019 | Capital Markets Outlook

As the S&P 500 Index teetered on the verge of a bear market at year-end, we fielded numerous questions about the prospects for an impending recession. Our answer is that we do not expect a recession in 2019. We will devote this quarter’s update to explain why. We are students of economic and financial market history, and we believe only a small handful of indicators help to forecast a recession. They are the slope of the yield curve, monetary policy settings, the supply of credit to the real economy, and clear signs of misallocation of capital. We would argue that none of these are present today