With gross domestic product falling for the second consecutive quarter, many investors are fearing that a recession is either inevitable or already upon the U.S. economy.
The Commerce Department said on Thursday that GDP (adjusted for inflation) fell by 0.2% in the second quarter, the equivalent of an 0.9% annual rate of decline. This follows a contraction of 0.4% in the first quarter, which meets a common but unofficial definition of a recession.
Still, most economists don’t believe the economy meets the formal definition of a recession, which is determined by a wider set of parameters, including measures of income, spending, and employment.
“We don’t think we’re in a recession just yet,” Aditya Bhave, senior economist for Bank of America, told the New York Times. “But the bigger point here is that the underlying trend in domestic demand is weakening. You see a clear deceleration from the first quarter.”
Even Federal Reserve Chairman Jerome Powell said in his remarks on Wednesday during the central bank’s announcement about its plans to raise interest rates by another 75 basis points that he didn’t believe the economy had hit that threshold yet.
“I don’t think the U.S. is currently in a recession, and the reason is there are too many areas of the economy that are performing too well and, of course, I’d point to the labor market in particular,” he said.
Whether the U.S. economy is approaching a recession or already in one, it may make sense to take a more proactive approach to investing in the stock market. That’s where active management can help.
“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.
As part of its lineup of active exchange traded funds, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP), the T. Rowe Price Dividend Growth ETF (TDVG), the T. Rowe Price Equity Income ETF (TEQI), the T. Rowe Price Growth Stock ETF (TGRW), and the T. Rowe Price US Equity Research ETF (TSPA).
T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
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