Recession Fears Ease as Investors Bet on Soft Landing, but Caution Remains

In 2024, fears of a looming recession have been a key issue for investors, but those worries are now waning.

As of October, only 8% of investors expect a severe economic downturn within the next year, according to a Bank of America survey, marking the lowest level of pessimism in two years. Most investors, 76%, predict a mild economic slowdown, while 14% anticipate no recession at all.

Investors are not expecting a recession anymore:

Just 8% of global investors think we’re headed for a hard landing within the next 12 months, according to the latest $BAC survey—near its lowest level in 2 years.

That means a staggering 76% believe the global economy will manage… pic.twitter.com/OoiI01G1ZD

— TrendSpider (@TrendSpider) October 16, 2024

Prediction markets support this shift, with PolyMarket data indicating that the odds of a U.S. recession this year have dropped significantly—from 30% in August to just 6% by mid-October. The change in outlook comes as stock markets and commodities like gold hit historic highs, boosted by the Federal Reserve’s recent rate cut—its first in four years—and expectations of further cuts.

Still, not everyone is convinced. Some analysts warn that rising gold prices, diverging from typical bond market trends, could signal hidden recession risks. For example, The Kobeissi Letter suggests that gold’s behavior points to potential economic trouble. Meanwhile, investor Robert Kiyosaki has cautioned that the gold rally might indicate an approaching market crash.

Despite the upbeat market, signs of caution persist. A report from Investing DeCrypted notes that the U.S. unemployment rate is climbing—a reliable recession indicator in the past. If this trend continues, it could foreshadow an economic downturn within the next three to six months.