If history repeats itself, as it's apt to do, the signs unhelpfully place the U.S. on either the cusp of a recession or a recovery.
This is according to CNBC who reports that the chance of the United States falling into a double-dip recession at nearly 50%.
That's because economies tend to work in self-reinforcing cycles. In good times, people spend, creating demand and jobs, which in turn leads to more spending, creating more jobs. Rainbows and butterflies.
But when things are bad, they only get worse. Unemployment decreases consumer power, leading to less demand, negating jobs, which further causes more unemployment, less spending, more saving. Doom and gloom.
Unfortunately, we're in the downward cycle now (as if you couldn't tell), and if measures aren't taken, then the country might find itself one step closer to the aptly named double-dip recession.
In the past 50 years, "every time that job growth has been as meager as it has been over the last four months, the economy has been headed toward recession, in a recession or in the immediate aftermath of one," said Joshua Shapiro of MFR in New York, who has diagnosed the economy more accurately than many other forecasters lately. (via CNBC)
"The chances that we are in something that is going to feel like a recession are close to 100 percent ... Whether we reach the technical definition" -- which is determined by a committee of academic economists and based on gross domestic product, employment and other factors -- "I think is probably close to 50-50."
Stagnant job growth in August hasn't helped measures, and CNBC reminds us that a stagnant job-growth rate -- meaning even if it doesn't go down -- in a growing population leads to a de facto higher unemployment rate.
While the statistics and countless "what ifs" don't paint a sunny picture of the near future, take heart in the fact that on the topic of the double-dip, even renowned analysts can't agree: 60%-75% of analysts don't actually think a double-dip recession is upon us.
James D. Hamilton, an economist at the University of California, San Diego, who has studied forecasting, reported to CNBC his belief that the economy would avoid a double-dip recession: "It's extremely hard to predict recessions," Mr. Hamilton said.
"Perhaps the best sign of how difficult it is to know the economy's direction is that, as a group, the nation's professional forecasters have failed to predict all the recessions since the 1970s, according to data kept by the Philadelphia Fed."
Either way, the economy will not turn around overnight. And whether you're an optimist or a cynic on the U.S. markets, you may be wondering how you can protect your portfolio from another downturn...
One way is to go back in time, and identify the companies that have outperformed the market during each of the market downturns over the last decade (i.e., between April 2000 - October 2002, and October 2007 - March 2009).
To further improve the quality of our list, we only focused on companies that have seen significant buying from institutional investors during the current quarter.
History suggests these dividend stocks are resilient during times of crisis, and big money managers seem to think there's more upside to be priced into these names. Is there any reason to expect it will be different this time around?
(Click here to access free, interactive tools to analyze these names.)
1. Urban Outfitters
2. Walter Energy
3. Sanderson Farms
4. Bio-Reference Laboratories
5. Vaalco Energy
7. Lannett Company
List compiled by Eben Esterhuizen, CFA.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman and Eben Esterhuizen do not own any of the shares mentioned above. Institutional data sourced from Reuters, historical pricing data from Yahoo! Finance.