Recession Coming? 4 Signs Pointing to a Major Market Downturn in 2022

A recession may be coming in 2022 and there are a few signs investors can watch that back up that idea.

A warning sign saying "recession ahead" representing a recession coming.

Source: Shutterstock

Let’s get into everything investors need to know about signs for a possible recession.

  • The first sign that investors will notice is the recent spike in energy prices.
  • Social Capital’s Chamath Palihapitiya recently explained this one on the All-In Podcast.
  • During that, he said that anytime energy prices have jumped by 50% or more in the last 30 to 440 years, a recession has followed.
  • Let’s take the price of crude oil for example.
  • This time last year, crude was going for $62.77 per barrel but not it’s going for about $117 per barrel.
  • That represents an 86.4% increase in crude oil prices year-over-year.
  • Another factor to consider is the rising price of wheat.
  • NorthmanTrader founder Sven Henrich pointed this one out in a Tweet yesterday.
  • He notes that the last time wheat was this expensive “the global financial crisis ensued.”
  • The Federal Reserve’s plan to increase interest rates could also be a sign that a recession is coming.
  • The Fed plans to increase interest rates to combat inflation, which is likely sitting at 8% now.
  • However, moving forward with interest rate hikes is likely to crash the economy.
  • Another thing to watch is yield curves.
  • Specifically, traders will want to keep an eye out for an inverted yield curve when prices head higher but yields are lower.
  • An inverted yield curve has preceded every recession in the U.S. since 1955.
  • Make sure to keep an eye on these factors are we stray closer to a recession.

Investors looking for more stock market news are in luck!

InvestorPlace has all the latest stock market news that traders need to know about for Wednesday! Among that is what has Imperial Petroleum (NASDAQ:IMPP) stock rising, this morning’s biggest pre-market stock movers, and more. You can find all of that at the links below!

More Stock Market News for Wednesday

On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/recession-coming-4-signs-pointing-to-a-major-market-downturn-in-2022/.

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