It is no secret that the latest economic data has rekindled fears of an impending recession. The Atlanta Fed’s estimate for real (inflation-adjusted) GDP growth for the current quarter was just slashed to negative 2.8% from a previously optimistic 2.3%, while Bloomberg’s probability of a recession ticked up to 25%. No doubt, the ongoing tariff skirmish is not helping, especially as related to the health of the consumer.

Yet, if history has taught us anything, it is that market timing based on economic downturns is an exercise in futility. Those attempting to sidestep recessions by exiting equities often find themselves missing out on some of the best returns. Indeed, as I have long maintained, time in the market trumps timing the market. And recessions are only determined after the fact as to when they have started and ended.

Stocks Before, During and After Recessions

The market is forward-looking, meaning it typically begins to rebound well before an economic downturn has officially ended. Investors who wait for the “all clear” often find themselves buying stocks at much higher prices than where they sold. As the accompanying historical data shows, equities have historically posted spectacular gains, on average, coming out of recessionary periods. Equally important, returns during the 12 months before a contraction officially began were nicely positive, on average.