The recent volatility in the stock market---this week alone has seen days of triple-digit losses and quadruple-digit gains for the Dow---has some investors concerned about what lies ahead for 2019. One strategist recently told CNBC he expects a 15 to 20 percent decline in the markets next year as the economy goes into recession. Others blow off predictions like that as overly pessimistic and negative.
Despite the rocky ride in the stock market in recent weeks, the fact remains that the underlying economy is still strong. Federal Reserve Chairman Jerome Powell even pointed that out in his announcement of another interest rate hike last week. "We have one of the strongest labor markets we've had in almost 50 years, we have the lowest unemployment since the Vietnam War, and we also have really strong GDP (Gross Domestic Product) growth," says Rebecca Walser, financial strategist and author.
Walser tells KTRH that the recession fears expressed by some analysts are unfounded. "Volatility is not necessarily a recession," she says. "A recession is sustained non-growth in GDP, and job losses, and all of those things."
That doesn't mean there are no causes for concern among investors. Walser points out that the markets have been overdue for a correction for a while. "If we make it to March without a 20 percent drawback or correction, then we will be in a ten-year bull market, which has never happened before in the history of our country," she says.
One possible area of concern Walser sees is the amount of debt still held by banks. She points out that the large banks bought up a lot of debt coming out of the Great Recession years ago, and now they're trying to clear it from their books. "Our country has gone through almost ten years of economic upside, and we are paying the bill now, so to speak," she says. "And that is what is causing this market to have jitters."