Brian Wesbury, chief economist at First Trust Advisors, warns that the economy may soon slip into a recession due to tight consumer credit conditions. He discusses the potential effects of this economic downturn on the stock market and takes a look at how certain political factors, such as Trump's Cabinet choices, could influence the macroeconomic environment.
Positive
With the warning of an impending recession and the potential for tighter consumer credit leading to decreased spending, sectors tied to consumer spending may face headwinds in the near term. Investors may want to consider defensive stocks or ETFs that focus on essential services which tend to perform well during economic downturns.
Negative
Conversely, stocks that are highly dependent on consumer discretionary spending may face significant pressure as the recession seems likely. This could negatively impact companies in retail and luxury sectors.
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