Don't Say Recession: What Data Really Says About the Economy - NTSA Summit

Are recession fears overblown? Shashi Mehrotra, the Senior Vice President and Chief Investment Strategist at Lincoln Investment, thinks so and came armed with historical data to prove it at a Feb. 26 session of the 2024 NTSA Summit in San Diego, "The Financial Landscape Ahead: AI, Recessions, and Asset Classes." 

Mehrotra's presentation aimed to educate advisors with the necessary tools and knowledge to navigate the complexities of the modern economic environment, technological advancements, and the strategic deployment of asset classes.

Mehrotra began his session by addressing the elephant in the room: the widespread speculation about an impending recession. Contrary to the doom-laden forecasts prevalent in the financial community, he offered a nuanced analysis that suggested a different trajectory.

"[The] bottom line here is this media frenzy about inflation turning into hyperinflation, and then we'll have stagnation like the 70s. It's complete nonsense," he states. He broadened the discussion to encompass broader geopolitical tensions and inflationary pressures, challenging the audience to think beyond simplistic historical comparisons to past economic downturns, such as the 1970s stagflation.

Using data and historical analysis, he challenged the audience's assumptions, providing a detailed rationale for his belief that fears of hyperinflation were unfounded and that a deep recession was not inevitable. "I don't think it's relevant because we've got to have a recession or not, you know, what's relevant? Is it going to be a deep or shallow recession? Because if it's a shallow recession, it really won't matter," Mehrotra remarked. Mehrotra underscored his view that a potential recession's depth and impact are more critical than the occurrence of a recession itself. Mehrotra encouraged financial advisors to leverage current economic insights for future strategic planning. 

The session then delved into the role of AI in the broader context of financial advising and market analysis. Mehrotra posited that AI's continued integration into financial strategies and client interactions is inevitable for the industry. He also stated that government regulation might put "shackles" on the progress of AI. "They're putting shackles on our AI companies, in my opinion. This is anti-growth," he states. According to Mehrotra, this technology offers unprecedented opportunities for enhancing the accuracy of market predictions and personalizing financial advice, thereby significantly improving client outcomes.

Mehrotra emphasized the critical importance of client education in the advisory role. He advocated for advisors to use the insights gained from his presentation to better inform and guide their clients through the economic landscape's complexities. "So when the media talks about the United States having systemic issues, trust me, it's not true," he states. This approach, he argued, is essential for setting realistic expectations and debunking common financial myths that can cloud judgment and decision-making.

The session also covered the potential of various asset classes in the event of an economic rebound. 

Mehrotra's session at the NTSA Summit provided:

• A comprehensive overview of the challenges and opportunities within the current financial landscape.
• Highlighting the importance of understanding economic cycles.
• Leveraging technology.
• Managing asset classes strategically.