In his recent interview on CNBC, Bill Nygren explained why this ‘recession’ is different. Here’s an excerpt from the interview:
Nygren: We’ve had two quarters of down GDP. In the past that’s always been called a recession. What’s different this time is the employment outlook is so much stronger, especially for the bottom quartile of earners, they’ve seen real wage increases, and no shortage of job opportunities at all.
Credit card spenders don’t default on their bills. Auto borrowers don’t default on their bills unless they lose their jobs. We think the prospects of maintaining their jobs throughout this economic soft period are quite strong.
I think the typical investor is going back to the past two recessions, the pandemic and also the great recession that the housing market caused in ’08.
Kind of following the playbook of which companies performed the worst in those two recessions. Those were not typical recessions at all. Most of my career it’s been a recession like what we’re in now, where there’s a debate during the recession of are we in one, are we not in one.
And by the time there’s general agreement that we’re in a recession, we’re on the way out of it, so we think the financials are well positioned this time to stay strong throughout a downturn.
You can watch the entire discussion here:
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