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Experts debate length severity recession
The likelihood of an economic recession in the U.S. is a near certainty as inflation and interest rates climb, according to industry experts who spoke to Pensions & Investments.
But there’s a divergence of views when it comes to the potential length and severity of the downturn.
In the worst-case scenario — a lengthy recession — institutional investors will have few places to seek respite from the gloom. Still, managers agreed the best place for institutional investors to park their money in that event would be in fixed income.
While these securities have been “pummeled” in 2022, noted Brian Nick, New York-based chief investment strategist at Nuveen, they are now boasting their highest yields in well over a decade.
Christopher Smart, Boston-based chief global strategist and head of the Barings Investment Institute at Barings LLC, said that although higher prices and rising interest rates are cutting into corporate profits, “we still see relatively high levels of household savings and abundant liquidity in corporate balance sheets, which offers a lot of cushion for more difficult times ahead.”
As such, Mr. Smart noted, “any U.S. recession, if it comes, should be relatively brief and mild by historical standards.”
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