ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Active ETF Channel
  2. Strong Growth May Not Protect From a Recession
Active ETF Channel
Share

Strong Growth May Not Protect From a Recession

James ComtoisDec 21, 2022
2022-12-21

Monetary policymakers are working under the assumption that the current growth momentum and strong labor markets in Europe and the U.S. may shield economies from a recession in 2023. There’s a weak relationship between economic momentum and the severity of an ensuing economic downturn, according to a white paper issued by T. Rowe Price.

Growth momentum and labor markets have been strong in Europe and the U.S. This has led the average Federal Open Market Committee members to forecast a growth rebound and a slightly rising unemployment rate in 2023 despite a significant tightening in monetary conditions. The European Central Bank’s current base‑case scenario also doesn’t anticipate a 2023 recession for similar reasons.

After examining whether growth momentum is correlated with the subsequent depth of the recession, T. Rowe Price found these correlations to be very low, indicating no statistically significant relationship between growth momentum and the depth of a subsequent recession.

T. Rowe Price also found that during the majority of previous recessions, the level of real GDP remained permanently below the level that would have been achieved had the recession not occurred. In other words, most previous recoveries had permanent effects on their output compared with before the recession.

“At present, monetary policymakers in both the eurozone and the U.S. rely on the narrative that strong growth momentum and a robust labor market will help their economies avoid a recession and achieve a soft landing, respectively,” according to the paper. “However, historical analysis suggests that current economic strength is not a reliable guide to the future. There is, therefore, a significant risk that monetary policymakers could still change their minds concerning their main economic narrative.”

If central banks change from this narrative and downgrade growth expectations, risk assets will likely underperform, and the yield curve can be expected to flatten. Such an environment beset with low returns and prolonged uncertainty can make active management appealing.

Unlike passive strategies that lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope may benefit from economies of scale, which can often translate to better returns.

As part of its lineup of active exchange traded funds, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP C), the +T. Rowe Price Dividend Growth ETF (TDVG B), the T. Rowe Price Equity Income ETF (TEQI B), the T. Rowe Price Growth Stock ETF (TGRW C), and the T. Rowe Price U.S. Equity Research ETF (TSPA C).

T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.

For more news, information, and strategy, visit our Active ETF Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X