Are Financial Advisors Expecting a Recession?

The hope was for the economy to come in for a soft landing, but now it feels like it just lost an engine.

Fears of a recession are on the rise after last week’s tariffs sent equity markets plummeting. Leaders from the industry’s largest wealth management firms are now saying a recession is fully on the table, with analysts from Goldman Sachs predicting a 45% chance of a recession occurring in the next 12 months. JPMorgan CEO Jamie Dimon wrote in his annual letter to shareholders this week that “the menu of tariffs” may or may not cause a downturn, but there will be a slowdown in growth. 

And, billionaire hedge fund manager Bill Ackman is a little all over the place, claiming that he maintains strong support for President Trump’s policies, while also saying the tariffs could bring about a “self-induced, economic nuclear winter.” Though all three major indexes are still down year-to-date, they did see major bumps Wednesday after Trump announced a 90-day pause on most tariffs. So, how are advisors taking it all in?

Don’t Hit the Panic Button

The problem is there are still plenty of unknowns for wealth managers to address. Even some of those who believe a recession is looming are uncertain about how soon it will come and how hard it will hit. S&P Global boosted its prediction for the likelihood of recession from 25% in March to between 30% and 35% now.

“What I can say confidently is that we will have a recession,” said Kyle Harper of Harper Financial Planning. “What I can’t say confidently is when or whether the tariffs will be the primary cause.”

Advisors’ jobs right now are to stay rosy and remind clients that their wealth plans were built with market downturns in mind. “We’re prepared to let the outside world be in chaos while feeling confident in our portfolios to perform how we expect through market cycles,” said Noah Damsky, a CFA at Marina Wealth Advisors, adding that he thinks the economy will weather the storm.

OK, Hit the Panic Button. Consumer confidence is … well, it’s been better. The indicator reached a 12-year low last month due to anxiety over tariffs and inflation, according to the Confidence Board research organization. The research found:

• The Present Situation Index, which measures consumers’ outlooks on current business conditions, dropped 3.6 points to 134.5 in March. 
• The Expectations Index that takes in short-term outlook for income, business, and labor market conditions, dropped 9.6 points to 65.2.

Michael Hansen, co-founder of Frontier Wealth Strategies, started telling clients in mid-March they should expect a recession, and tweaked their portfolios accordingly. “I kept everything liquid, so if we do avoid a recession, we can be back in with a day’s notice,” he told Advisor Upside.