Courtney Garcia, Payne Capital Management senior wealth advisor, joins ‘Closing Bell’ to discuss the looming CPI report, Fed next moves and the markets getting over recession fears….(read more)

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A Recession Would Likely Be More Muted, Says Payne Capital’s Courtney Garcia

The global economy has been facing numerous challenges in recent times. From the ongoing COVID-19 pandemic to supply chain disruptions and inflation pressures, the world is bracing for a possible economic downturn. However, according to Courtney Garcia, a financial advisor at Payne Capital, a potential recession would likely be more muted than previous ones.

Garcia believes that the lessons learned from past recessions combined with the current economic landscape have prepared us for a more controlled and managed downturn. The major factor contributing to this belief is the massive government intervention that has taken place throughout the COVID-19 pandemic. Governments worldwide have injected trillions of dollars into the economy, providing relief packages, stimulus checks, and financial aid to individuals and businesses. This intervention has created a safety net that could help soften the blow of a potential recession.

Additionally, the development and deployment of vaccines against COVID-19 have improved economic prospects. As vaccination rates increase, restrictions are lifted, and consumer confidence returns to pre-pandemic levels. This is likely to lead to a faster economic recovery compared to previous recessions, where the cause of the downturn was not health-related.

Moreover, businesses and consumers have adapted to the “new normal” of remote working and online purchasing. This adaptation has enabled companies to maintain their operations during the pandemic, and consumers have become more comfortable with online shopping. This resilience means that even during a recession, economic activity could continue to some extent, mitigating the severity of the downturn.

Garcia also highlights the increased liquidity in financial markets as another reason why a potential recession would be more muted. Central banks around the world have kept interest rates low and engaged in large-scale asset purchasing programs. These measures have ensured that there is sufficient liquidity to support businesses and prevent a widespread credit freeze, which was a major problem during the 2008 financial crisis.

Despite the positive outlook, Garcia cautions that the extent and duration of any potential recession will still depend on a range of factors. Supply chain disruptions, geopolitical tensions, and the evolution of the pandemic could all impact the level of economic hardship experienced. Additionally, the sustainability of government support measures and the ability of businesses to adapt to changing circumstances will be crucial in determining the severity of the downturn.

In conclusion, while a potential recession is always a matter of concern, the current economic landscape suggests that it would likely be more muted compared to previous downturns. Lessons learned from past crises, massive government intervention, increased liquidity, and the adaptability of businesses and consumers all contribute to a more controlled and manageable economic downturn. However, vigilance and flexibility will remain crucial as we navigate the ongoing uncertainties and challenges faced by the global economy.