{"id":36318,"date":"2023-07-16T05:34:18","date_gmt":"2023-07-16T09:34:18","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/anatomy-of-a-recession-update-gradually-then-suddenly\/"},"modified":"2023-07-16T05:34:20","modified_gmt":"2023-07-16T09:34:20","slug":"anatomy-of-a-recession-update-gradually-then-suddenly","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=36318","title":{"rendered":"Anatomy Of A Recession Update: Gradually, Then Suddenly"},"content":{"rendered":"
\n

<\/picture>
<\/figcaption><\/figure>\n<\/p>\n

By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments<\/em><\/p>\n

In this episode, we speak with Jeff Schulze, head of economic and market research at ClearBridge Investments about the Federal Reserve, rolling-sector recessions, artificial intelligence, and receive the latest update on the ClearBridge Recession Risk Dashboard.<\/span><\/em><\/p>\n

Transcript<\/h2>\n

Host:<\/strong> Welcome to Talking Markets with Franklin Templeton. Today we\u2019re talking about the state of the US economy with Jeff Schulze, Head of Economic and Market Research at ClearBridge Investments, a specialist investment manager of Franklin Templeton. In our last conversation with Jeff, we discussed a wide variety of economic topics, including the possibility for the economy to have soft landing, the employment market, the consumer, and of course, the May 31st ClearBridge Recession Risk Dashboard update. Today we’re going to focus on the Federal Reserve, rolling sector recessions, and artificial intelligence. And of course, I’ll also ask Jeff to provide an update on the ClearBridge Recession Risk Dashboard. Welcome Jeff and thank you for joining us.<\/span><\/p>\n

Jeff Schulze:<\/strong> Glad to be here.<\/p>\n

Host<\/strong>: Jeff, I wanted to start by asking you about artificial intelligence. AI, as it\u2019s referred to, appears to be a big driver in the strong equity market performance this year. What are your thoughts on the future AI has in the US economy?<\/p>\n

Jeff Schulze:<\/strong> Well, obviously, AI has supercharged the indexes, for the S&P 500 and the NASDAQ. And there\u2019s some optimism that the productivity wave that we\u2019ll get from AI will keep the economy out of a recession over the next couple of years. And while I\u2019m expecting a large productivity wave that could rival what we\u2019ve seen during the internet revolution in the 1990s and the 2000s, I think the wave is going to come too late this cycle to stave off a recession. And the reason why I say that – a lot of companies are investing in AI technology, so it\u2019s going to take a couple of years to realize the benefits of that investment. But if you look at productivity right now, it\u2019s extremely negative on a year-over-year basis and at levels that are typically seen during recessions. So this is reinforcing the notion that companies are hoarding labor at the expense of profitability. So, while I\u2019m optimistic about AI and the benefits that it\u2019s going to bring not only for the economy but for the markets and company profitability, I just think it\u2019s going to come a little bit too late for this current expansion to be saved.<\/p>\n

Host<\/strong>: Okay. So, shifting topics. Rolling-sector recessions is a phrase that I\u2019ve been hearing quite a bit about recently to characterize the current state of the US economy. Does this resonate with you?<\/p>\n

Jeff Schulze:<\/strong> Well, there has been some optimism on a rolling recession: this idea that different parts of the economy will go into recessionary territory, and by the time that they come out of recession territory and they start expanding, other areas of the economy will go into a downturn. Now, a lot of this optimism is coming from the recent strength that you\u2019ve seen in housing, which is one of the most interest rate-sensitive areas of the economy. Housing starts in May saw its largest monthly pickup in over three decades. The Case-Shiller National Home Price Index has rebounded over the last two readings. And, although I\u2019m optimistic about the rebound that we\u2019ve seen in housing, it\u2019s important to remember that historically many past downturns have initially resembled a rolling recession. The only real synchronized downturn that we saw was in 2020 when you shut down the entire economy.<\/p>\n

So, the way that it usually works is that housing goes down first, followed by durable goods, and then some of the less cyclical areas of the economy actually go into decline closer to the onset of the downturn, like services and non-durable goods. Now importantly, although we\u2019ve had a bounce in housing, it\u2019s not unheard of to see a bounce within a larger downturn, both in the lead-up to and during the past recessions that we\u2019ve seen. Furthermore, the economy can enter into a recession while housing remains relatively healthy. That\u2019s something that we saw in 2001. So, I know that there\u2019s a lot of ink spilled about this being a rolling recession. But, given that this is typically the dynamic that you see heading into an economic downturn, it does give us pause that the probability of one will play out resulting in a soft landing in the coming quarters.<\/p>\n

Host<\/strong>: Okay. So in some of our recent conversations, we have focused quite a bit on the leading economic indicators. Are there any changes there to take note of?<\/p>\n

Jeff Schulze:<\/strong> Well, yeah, I think it\u2019s important to note that a lot of the data that\u2019s been surprising to the upside, the resilient data has been lagging or coincident. It can tell us where we\u2019ve been or where we are, not necessarily where we\u2019re going. And I think a great analogy for this is like driving a car. When you\u2019re driving a car, you don\u2019t want to be looking in the rearview, you don\u2019t want to be looking out the side window. You really want to be looking through the windshield. And that\u2019s why the Leading Economic Indicator Index by the Conference Board is so important. Now, importantly, usually when you see four consecutive monthly declines of this index, you\u2019re in the recessionary danger zone. Today we\u2019ve seen 14 consecutive monthly declines, and the only two times where you had a greater streak of negative declines was 1973, and then the global financial crisis. From our vantage point, although the data has been resilient, looking into the back half of the year, we\u2019re not so sure that that\u2019s going to continue to be the case.<\/p>\n

Host<\/strong>: Okay. Fourteen consecutive monthly declines, that\u2019s a big number. That leads me to the ClearBridge Recession Risk Dashboard. How do things look with your June 30th update?<\/p>\n

Jeff Schulze:<\/strong> Yeah, so as a reminder, the Recession Risk Dashboard is a group of 12 variables that have historically foreshadowed a looming recession. Stoplight analogy where green is expansion, yellow is caution and red is recession. And as of June 30th, we have an extremely red overall signal: 10 red, two yellow, and zero green signals. If you look back to the last eight recessions, this is traditionally what the dashboard looks like as you head into those recessions. So we continue to believe that a lot of the economic momentum that we\u2019re seeing today is going to start to slow dramatically as we get to the back half of the year.<\/p>\n

Host<\/strong>: So given that view, the obvious follow-up question here is, do you have at this point any additional clarity on when the most anticipated recession will actually begin?<\/p>\n

Jeff Schulze:<\/strong> So, when the overall dashboard went red at the end of August of last year, we had felt in September that it was going to take about a year for the economy to roll over, given the strength that we\u2019ve seen, and the longest length of lead time between an overall red signal and the start of a recession was in 1990\u2019s downturn. That was about 13 months. So we thought there was a pretty strong parallel, at least from a timing perspective. But, given recent economic strength, it actually may not be the third quarter of this year, it may be the fourth quarter. But I think importantly if you look at why you\u2019ve seen the economy hold up better, and the markets hold up better here recently, you\u2019ve seen some pretty strong economic momentum. If you look at the economic surprise indexes, and you can look at the Bloomberg or the Citi Economic Surprise Index, they measure the frequency with which data releases are beating or missing consensus expectations.<\/p>\n

And because you\u2019ve seen such strong data releases here – and we talked a little bit about housing a second ago – this series tends to be mean reverting, and right now they\u2019re in the top decile of all readings, top 10%. Usually, when you\u2019re at these levels, they tend to roll over and you start to get a string of disappointing data. And that\u2019s what we\u2019re anticipating again in the back half of this year that is going to remove important support for the prospects of a soft landing. Now, I think maybe more importantly, if you look at history, it usually shows that the economy often experiences a sharp deterioration in economic momentum as recessionary forces coalesce. And looking back at the last eight recessions – so to the late 1960s – three quarters prior to the onset of a recession, real GDP [gross domestic product] growth in the US has averaged 4.6% on a real basis. In the two quarters prior, that moves down a little bit, but it\u2019s still at a robust 3.5% on a real basis. But the key here is one quarter before the onset of a recession, that 3.5% drops to 0.8% – so barely positive territory. So just because we\u2019ve had some resilience and economic activity again in the first half of the year, doesn\u2019t really tell us about what\u2019s going to transpire in the third and the fourth quarters of this year.<\/p>\n

So given that you see this non-linear acceleration to the downside, it actually reminds me of the Ernest Hemingway novel, The Sun Also Rises<\/em> when the character Mike Campbell was asked, \u201cHow\u2019d you go bankrupt?\u201d And he said, \u201cTwo ways. Gradually, then suddenly.\u201d<\/p>\n

Host<\/strong>: So Jeff, earlier in the year, we had the Silicon Valley Bank (OTCPK:SIVBQ) failure as well as a couple of additional smaller regional banks go down. Headlines are starting to now poke up on the topic of banks having potentially some trouble on a go-forward basis. Is there anything unique from your point of view that we should be aware of in the banking sector as we start the second half of 2023?<\/p>\n

Jeff Schulze:<\/strong> We\u2019ll only know in hindsight whether we\u2019ve seen the last major regional bank failure. We certainly could see another one as the Fed [US Federal Reserve] continues its rate-hiking cycle. But the one thing that you will see is a continued tightening of lending standards. Now, importantly, even before Silicon Valley\u2019s bankruptcy, lending standards for C&I [commercial and industrial] loans for businesses, lending standards for consumers, were already at recessionary levels, and they\u2019ve gotten even more restrictive as a consequence of some of those banking stresses. But I think maybe more importantly, loan demand has been plummeting for large, medium, and small businesses. So there\u2019s less of a willingness for credit creation, but there\u2019s also less of a willingness to borrow. And that\u2019s not really a good dynamic for strong future economic activity. Now, a lot of the tighter lending standards are going to be administered by smaller banks, in our opinion. Those are banks outside of the top 25 in the United States. They aren\u2019t systematically important, so the Fed\u2019s not going to ride to the rescue. Also, they have less regulatory scrutiny, so I\u2019m sure they have a lot of the risk-management issues that we saw with the regional banks that failed. But also, small banks make up a disproportionate amount of lending in commercial real estate – over two-thirds of that marketplace. And obviously, that\u2019s an area that\u2019s seeing some strains. So we think small banks are going to pull back the reins on lending, but importantly, they pack a pretty big punch. Small banks make up less than 29% of total banking assets, but they play a disproportionate role in lending – accounting for 36% of the total.1<\/sup> And in the last year, they\u2019ve accounted for 66% of total loan growth. And a key reason for that is small banks tend to have relationships with small businesses, which we\u2019ve been saying are the key catalysts or the key driver of not only a hot labor market but the economic momentum that we\u2019ve seen in this particular cycle.<\/p>\n

Host<\/strong>: Okay. So clearly keeping an eye on the smaller regional banks is going to be important for us as the year progresses. You mentioned earlier small businesses. How are small businesses faring at this point?<\/p>\n

Jeff Schulze:<\/strong> Well, small businesses tend to feel the impact of monetary tightening with a lag compared to larger companies. Larger companies can access the capital markets. They issue debt in fixed terms. So, when the expectations of a rate hike come into the marketplace, that\u2019s priced immediately, and it\u2019s felt by those larger companies. Smaller companies, by contrast – they have relationships with small banks, and they borrow from those banks at a floating short-term rate plus a spread. So they feel the impacts of monetary policy decisions when that rate hike actually is instituted and their borrowing costs adjust accordingly. Now, importantly, if you look at the NFIB Small Business Survey, the average rate that a small business is being charged for a loan has jumped from 5% to almost 8% today. So that\u2019s a pretty large jump in borrowing costs in a short period of time.<\/p>\n

So that\u2019s pressuring profitability, but also small businesses have lost the ability to pass through higher price increases. Now, in the aftermath of the pandemic, the differential between the number of companies raising prices and raising compensations was at record highs. So this led to a huge profitability wave. And over the last year, that gap has narrowed considerably with only a few companies looking to raise prices compared to those raising compensation. So profitability is being squeezed for small businesses, and eventually, we think that this will lead to cost-cutting measures, which include layoffs. So you\u2019ll finally see that the layoff cycle broadens from just kind of large-cap, more tech-oriented companies into Main Street America.<\/p>\n

Host<\/strong>: Okay. That certainly makes sense. Do you see any other potential headwinds in the economy? Maybe things that you\u2019re keeping a keen eye on?<\/p>\n

Jeff Schulze:<\/strong> Yeah, we think that there\u2019s balance sheet fatigue for consumers. Now obviously there are tighter lending standards for consumers, as we talked about earlier, that\u2019s going to constrict some credit creation. But also, US consumers have been going toward revolving credit in a much greater degree over the last year in order to sustain their spending. And importantly, with the average credit card debt at record highs of 21%, we think that this can continue for maybe three or more, maybe six months, but there is going to be a point where the rubber hits the road.2<\/sup> Maybe more importantly, if you look at delinquency rates across different avenues of consumer credit, they\u2019ve hooked up pretty meaningfully here recently. You\u2019ve seen an increase of auto delinquencies, other credit delinquencies, credit card debt delinquencies, and mortgage delinquencies have moved a little bit higher. But really, I think something that could create more of an increase of delinquencies is the student loan repayments that are likely coming in the fall of this year. Now, we think that this is going to have some knock-on effects to not only student loan delinquencies but all of those other areas of credit. And if you look historically, when all of these areas start to move up in tandem with one another, that\u2019s not a good sign for the durability of an expansion. So we continue to believe that you\u2019re seeing balance sheet fatigue by consumers, which increases recession odds.<\/p>\n

Host<\/strong>: Okay. So the consumer is becoming susceptible. So Jeff, given all that you\u2019ve laid out here for us on the state of the US economy and the data that the Federal Reserve is analyzing, what are they telling us? What are they telegraphing?<\/p>\n

Jeff Schulze:<\/strong> Well, the Fed, although they haven\u2019t come out and said it, they\u2019re basically soft messaging that a shallow recession is on the horizon. And the way that you can glean this out is by looking at their dot plots or their expectations for the unemployment rate. Right now, the Fed expects the unemployment rate to be 4.1% at the end of this year. And if that indeed transpires, that would violate what\u2019s called the Sahm Rule, which states that an increase of half a percent or more in the unemployment rate (and the lows were 3.4%) has always led to a recession over the course of the last 55 years. So, when you think about layoffs, usually you don\u2019t get a little bit of a layoff cycle. It usually metastasizes into a much larger layoff cycle. And I think, importantly, the Fed has little tolerance for job loss historically, and that\u2019s not necessarily the case today.<\/p>\n

If you go back to the late 1950s, the median for the first rate cuts usually comes between the instance of the economy creating jobs to kind of a standstill. And a year later, the loss of jobs is at 796,000. Now, what the Fed is implying by their dot plots is they\u2019re anticipating close to 800,000 jobs lost this year in the back half of 2023. And in this environment, they\u2019re expecting themselves to raise rates by another 50 basis points or two hikes. So if the Fed is going to be later to the game in providing stimulus, they\u2019re more comfortable with job loss, we think that this creates a higher recessionary impulse when all is said and done.<\/p>\n

Host<\/strong>: Okay. So 800,000 jobs being lost. That\u2019s a huge number. You mentioned the Fed. The FOMC has got their next meeting set for the end of this month, and you mentioned potentially additional rate increases. Do you think that they\u2019re going to take a stance here at the end of July, or will they wait for the next meeting?<\/p>\n

Jeff Schulze:<\/strong> Well, I think they\u2019re going to take the chance to raise rates. Non-farm payrolls came in at 209,000 in June. The three-month average, although it dropped pretty dramatically because of some negative revisions to what we saw in April and May, is still 247,000 jobs per month. To put that number in perspective, the last time you saw sub-4% unemployment was in the back half of 2018. In all of 2019, the US economy was creating about 155,000 jobs per month. So we\u2019re creating roughly two-thirds more jobs today than what we saw back then. So, this is still a pretty hot labor market, and barring a huge miss to the downside in the CPI\u2019s release later this month, I think the Fed will hike at the end of July. But, at the end of the day, I think that the die is cast for recession, given all the things that we talked about earlier with the leading indicators, with the dashboard, balance sheet fatigue. Again, I think that this is not necessary, but I think that they ultimately will do a hike at the end of this month.<\/p>\n

Host<\/strong>: So Jeff, let\u2019s do a quick pivot here and transition to capital markets. We\u2019ve seen strong positive performance in the S&P 500 index – as a proxy – and the NASDAQ 100. What\u2019s driven this performance in 2023 to this point?<\/p>\n

Jeff Schulze:<\/strong> Well, believe it or not, almost all of the rally that you\u2019ve seen in the S&P 500 has come since Silicon Valley Bank\u2019s collapse and seizure in mid-March. From that point until the beginning part of June, most of that rally was the top 10 names in the S&P 500 – mega-cap tech stocks that are really going to benefit from the AI wave that the economy\u2019s going to experience. But really since the beginning part of June, you\u2019ve seen a broadening out of participation into more cyclical areas of the market and smaller-cap names. Now, again, that\u2019s a really good dynamic. If that continues as we move through the summer, maybe they have some sustainability of this rally. But given our views on the economic surprise index that we talked about earlier and the slower pace of economic activity, we don\u2019t necessarily think that that\u2019s sustainable. But I think another reason potentially for concern is that almost all of the advance that you\u2019ve seen in the S&P 500 from the October 2022 lows has been driven by multiple expansion (forward PEs moving higher), and none of it\u2019s been driven by improved earnings expectations. So, with forward earnings of the market back up over 19 times earnings, we think that adds a very optimistic outlook that\u2019s being embedded in equities right now.<\/p>\n

Host<\/strong>: Okay. Jeff, I can clearly hear the concern in your commentary. In some previous conversations, you\u2019ve mentioned retesting the equity market lows that were experienced back in October of 2022. Do you still think that that\u2019s probable?<\/p>\n

Jeff Schulze:<\/strong> Yeah, I think we will retest. Will we ultimately break through the lows? It\u2019s hard to say at this point. I mentioned before that PEs are now above 19 times forward earnings, which is historically pretty rich. I think also more importantly, if you look at consensus year-over-year expectations for earnings growth, there\u2019s an expectation that it\u2019s going to rise to over 20% positive by the third quarter of this year.3<\/sup> It\u2019s going to turn positive as we get through this earnings release is the expectation. And that\u2019s in stark contrast to what consensus economist forecasts are for nominal GDP growth. So one of these two cohorts is ultimately wrong. Given our view on economic activity, we think that the market is pretty optimistically priced at this point, but I think maybe more importantly, if you look in the post-World War II era, you\u2019ve had 12 recessions. You\u2019ve never seen the market trough or bottom before the start of a recession.<\/p>\n

And if October 22 was the lows for this cycle, that trough would\u2019ve occurred a year potentially ahead of this upcoming downturn. So, I do think that the markets are not pricing in this upcoming recession that we\u2019re anticipating. Now, will we break through the lows? That\u2019s hard to say because we\u2019re probably in the honeymoon phase right now of artificial intelligence. The AI narrative is quite appealing. This is the emergence of a technological innovation that can transform businesses by boosting productivity and enhancing margins in the process. Companies there are large, they\u2019re cash rich, they\u2019re tech leaders well-positioned to benefit from what appears to be a very large addressable market opportunity. And although a lot of people compare this to the dot.com bubble, it\u2019s not as high from a valuation perspective as what we saw in those heady times. Valuations are about half the levels for the S&P 500 as what you saw back in March of 2000.<\/p>\n

Also, the S&P 500 is 50% more profitable as measured by return on equity as what we saw in March of 2000. So the real wild card in my vantage point is, will investors buy the dip in these perceived AI beneficiaries that keep the indexes elevated compared to what you would normally think a recession would materialize with. And it\u2019s hard to know how much euphoria or positive sentiment and capital is going to flow into that space. But ultimately, we think we\u2019ll retest the lows. I\u2019m not sure that we\u2019ll break through those lows. That real wildcard comes back to the excitement around AI.<\/p>\n

Host<\/strong>: Terrific insight there, Jeff, and I love that analogy of a wild card. Any final insight today for our listeners?<\/p>\n

Jeff Schulze:<\/strong> So with the recession on the horizon, obviously this has been a little bit of a glass-half-full view for what we\u2019re anticipating for financial markets. We\u2019re certainly expecting some volatility as this recession is priced. With the recession on the horizon, we\u2019d advocate that any selloff that we see in this downturn be used as an opportunity for long-term investors, because we do believe that the AI movement will likely produce a productivity wave that\u2019s going to help insulate corporate returns from the megatrends of an aging population, de-globalization, and re-shoring.<\/p>\n

Although the obvious beneficiaries have seen their valuations swell as we just talked about, I think the larger benefit may actually accrue to the old economy – labor-intensive companies with thin profit margins that can upscale their more junior staff relatively quickly, leading to a pretty big boost in earnings power from efficiency and productivity gains. And this can help boost a lot of the underperformers, quite frankly, that we saw from the last cycle, and provide the catalyst for what I believe would be the last leg of the secular bull market that I believe that we\u2019ve been in since the March 2009 lows following the global financial crisis.<\/p>\n

And if you\u2019re not familiar with the term secular bull markets, they\u2019re usually a 20-year period where you see outsized equity returns. But they\u2019re usually followed by secular bear markets, which is a 10- to 20-year period where the markets don\u2019t move up materially. And this is a dynamic that\u2019s been going on since the early 1930s, and if history continues to run in these cycles, that would suggest that this secular bull market still has another seven years to run through the end of this decade. So, although we\u2019re expecting some downside volatility, it\u2019s important to keep that long-term perspective intact.<\/p>\n

Host<\/strong>: Jeff, thank you for your terrific insight as we continue to navigate here in 2023. Once again, today\u2019s guest was Jeff Schulze, the architect of the Anatomy of a Recession Program. If you\u2019d like to hear more Talking Markets with Franklin Templeton, visit our archive of previous episodes and subscribe on Apple Podcasts, Google Podcasts, Spotify, or just about anywhere else you listen. Thank you for joining Talking Markets.<\/p>\n

WHAT ARE THE RISKS?<\/strong><\/em><\/p>\n

All investments involve risks, including possible loss of principal. <\/strong>The value of investments can go down as well as up, and investors may not get back the full amount invested.<\/strong> Equity securities<\/strong> are subject to price fluctuation and possible loss of principal. Fixed income securities<\/strong> involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Treasuries<\/strong>, if held to maturity, offer a fixed rate of return and fixed principal value; their interest payments and principal are guaranteed.<\/em><\/p>\n

Any companies and\/or case studies<\/strong> referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.<\/em><\/p>\n

There is no assurance that any estimate, forecast or projection will be realized.<\/em><\/p>\n

Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses, or sales charges. Past performance does not guarantee future results.<\/strong><\/em><\/p>\n

Data from third-party sources may have been used in the preparation of this material and Franklin Templeton (\u201cFT\u201d) has not independently verified, validated, or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions, and analyses in the material is at the sole discretion of the user.<\/em><\/p>\n

Products, services, and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and\/or their distributors as local laws and regulation permits. Please consult your own financial professional for further information on availability of products and services in your jurisdiction.<\/em><\/p>\n

Issued in the U.S. <\/span>by Franklin Distributors, LLC. Member FINRA\/SIPC, the principal distributor of Franklin Templeton\u2019s U.S. registered products, which are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation. Issued by Franklin Templeton outside of the US.<\/em><\/p>\n

Please visit <\/em>www.franklinresources.com<\/em> to be directed to your local Franklin Templeton website.<\/em><\/p>\n

Copyright \u00a9 2023 Franklin Templeton. All rights reserved.<\/em><\/p>\n

1<\/em><\/sup> Sources: Federal Reserve, FactSet. Past performance is not a guarantee of future results.<\/strong> (note: sourcing is for pages with full transcript listed)<\/em><\/p>\n

2<\/em><\/sup> Ibid.<\/em><\/p>\n

3<\/em><\/sup> Sources: S&P, FactSet, Credit Suisse. Past performance is not a guarantee of future results<\/strong>. Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses, or sales charges.<\/em><\/p>\n

Original Post<\/em><\/p>\n

Editor’s Note:<\/strong> The summary bullets for this article were chosen by Seeking Alpha editors.<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research at ClearBridge Investments about the Federal Reserve, rolling-sector recessions, artificial intelligence, and receive the latest update on the ClearBridge Recession Risk Dashboard. Transcript Host: Welcome to Talking Markets with Franklin Templeton. Today we\u2019re […]<\/p>\n","protected":false},"author":1,"featured_media":36319,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-36318","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nAnatomy Of A Recession Update: Gradually, Then Suddenly | iFintechWorld<\/title>\n<meta name=\"description\" content=\"By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=36318\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Anatomy Of A Recession Update: Gradually, Then Suddenly | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=36318\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-07-16T09:34:18+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-16T09:34:20+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1689500059_image_1402306256.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1536\" \/>\n\t<meta property=\"og:image:height\" content=\"1022\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"24 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=36318#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=36318\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Anatomy Of A Recession Update: Gradually, Then Suddenly\",\"datePublished\":\"2023-07-16T09:34:18+00:00\",\"dateModified\":\"2023-07-16T09:34:20+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=36318\"},\"wordCount\":4854,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=36318#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=36318\",\"url\":\"https:\/\/ifintechworld.com\/?p=36318\",\"name\":\"Anatomy Of A Recession Update: Gradually, Then Suddenly | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-07-16T09:34:18+00:00\",\"dateModified\":\"2023-07-16T09:34:20+00:00\",\"description\":\"By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=36318#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=36318\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=36318#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Anatomy Of A Recession Update: Gradually, Then Suddenly\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Anatomy Of A Recession Update: Gradually, Then Suddenly | iFintechWorld","description":"By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=36318","og_locale":"en_US","og_type":"article","og_title":"Anatomy Of A Recession Update: Gradually, Then Suddenly | iFintechWorld","og_description":"By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research","og_url":"https:\/\/ifintechworld.com\/?p=36318","og_site_name":"iFintechWorld","article_published_time":"2023-07-16T09:34:18+00:00","article_modified_time":"2023-07-16T09:34:20+00:00","og_image":[{"width":1536,"height":1022,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1689500059_image_1402306256.jpg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"24 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=36318#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=36318"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Anatomy Of A Recession Update: Gradually, Then Suddenly","datePublished":"2023-07-16T09:34:18+00:00","dateModified":"2023-07-16T09:34:20+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=36318"},"wordCount":4854,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=36318#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=36318","url":"https:\/\/ifintechworld.com\/?p=36318","name":"Anatomy Of A Recession Update: Gradually, Then Suddenly | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-07-16T09:34:18+00:00","dateModified":"2023-07-16T09:34:20+00:00","description":"By Jeffrey Schulze, CFA, Investment Strategist, ClearBridge Investments In this episode, we speak with Jeff Schulze, head of economic and market research","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=36318#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=36318"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=36318#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Anatomy Of A Recession Update: Gradually, Then Suddenly"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/36318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36318"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/36318\/revisions"}],"predecessor-version":[{"id":36320,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/36318\/revisions\/36320"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/36319"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36318"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}