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Economy , US Markets

Why a U.S. Recession May Foil Economists’ Expectations

“Many classic indicators of a recession are exactly where they were at the …”

by Bob Stokes
Updated: June 01, 2023

You may have heard that Germany has slipped into a recession.

What you may not have heard is, the German government anticipated an economic uptick in Q1, not a slide.

Reality failing to meet expectations may extend beyond the German economy. A similar scenario could play out in the U.S.

Here's what I mean: The Federal Reserve Bank of Philadelphia's Second Quarter survey revealed that the average expectation of 38 "professional forecasters" is for real GDP growth of 1.3% in 2023.

Perhaps these professionals have not taken a hard look at some key leading economic indicators, or if they have, they interpret them differently than Elliott Wave International.

Specifically, our just-published June Elliott Wave Financial Forecast showed this chart and said:


Many classic indicators of a recession are exactly where they were at the beginning of past recessions. In fact, the year-over-year change in the Conference Board's Leading Indicators Index, which includes 10 different measures, is at -8% ... similar readings came near the outset, or in, each of the last four recessions. In April, just three out of ten indicators were positive... A 4% decline in the LEI index signals a recession, according to the Conference Board, so the majority of economists are clearly bucking history.

Now, one of the three of ten indicators that are positive is the S&P 500.

What are the expectations for this index?

Here's a May 8 headline from Marketwatch:

S&P 500 could rise as high as 4,400 in coming months, says Wall Street strategist who called 2023's rebound

Yes, big technology names helped to carry the S&P 500 higher. And this strategist might turn out to be right about the future performance of the index.

However, it might be a good idea to check out what the Elliott waves are saying about the stock market. After all, the performance of the economy tends to follow the performance of the stock market.

Get the insights that you need by following the link below.

Will the “Artificial Intelligence” Boom Save the Stock Market?

Our just-published June Elliott Wave Financial Forecast offers answers and insights into the AI boom. The charts and commentary are worth your immediate attention.

And so is our analysis of the rally in the overall technology sector.

And, yes, so is our analysis of the overall U.S. stock market.

If our analysis is correct, the stock market is at or near a major juncture.

Learn what you need to know from our independent analysis and forecasts by following the link below.

“Lizard People” and Other Conspiracies: What’s Social Mood Got to Do with It?

In a word, everything. From political conspiracies to Covid-related ones to the theories so bizarre that they seem too silly to be relevant, we live in the golden age of conspiracy theories. And while it’s easy to blame social media for their spread, we think the roots go deeper. Watch our new Mood Riff episode where the host Greg Eident explains some fascinating socionomic findings on the subject.

Investing: What You Can Learn from Mom and Pop

Sentiment indicators provide valuable information, yet they are best used in conjunction with Elliott wave analysis. Here's one time-tested indicator that has recently displayed a "big surge."

Market Trek: "No crowd buys stocks of other countries intelligently"

When you track historical patterns of foreign investments in U.S. equities, an important picture emerges. Watch as our Market Trek host Brian Whitmer walks you through a chart of the collective foreign buying interest going back to the 1990s and through today. (Brian's global destination is South Korea.)