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Should you worry a recession is coming?

The “R-word” is back in the news.

The rising cost of living coupled with a dip in the nation’s business output, declining stock prices and geopolitical worries suggest the economy is facing some real challenges.

Personally, I wonder if this economic angst is more a symptom of this age of weaponized anxiety. There’s less than a 1% chance of a recession, according to a probability index by an Oregon professor who tracks economic variables. His work is charted above!

However, I’ll note that recent surveys show 28% of economists (Wall Street Journal) and 81% of consumers (CNBC) think an upcoming recession is a solid possibility.

Instead of me explaining the proper level of recessionary worry, I’ll let you decide on the likelihood of a recession.

What follows are 10 economic forces with recession-causing powers. All you have to do is decide if these factors are a big worry today or not. You can add up your biggest concerns and check my formula below for your forecast. Or, you can take the online version of this forecast tool by going to https://bit.ly/recessionforecast!

And if this scorecard says you possess plenty of big worries, then prepare yourself for the possibility of a major economic pullback.

1. Infectious inflation

How financially painful are today’s rising prices and will inflation morph from just a budgetary headache into a major monetary impediment? Forget the cost to your wallet. Inflation can dramatically change how consumers and corporations think about money — and it’s not usually in a positive way.

Worry? Will the worst bout of inflation in four decades make people too cautious about how they spend and invest?

2. Shopping stoppage

Collectively, the economy is about how much consumers and companies spend. Let’s face it, many folks and businesses today are flush with cash. And much of the recent economic strength can be tied to putting those spare dollars to work. That might not last for eternity.

Worry? Will the boom-time mentalities change, making savings vs. spending the next hot fashion?

3. Fed foibles

There is probably too much faith put in the nation’s central bank — the Federal Reserve — and its abilities to effectively manage economic challenges. History tells us the Fed’s batting average isn’t all that good. And its delayed reaction to current challenges isn’t a good start to fixing this cycle’s problems.

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