An investor cannot invest directly in an index. In this environment, economic reports take on added significance. And economic numbers have been mixed, so those analysts with both positive and negative views found reports to support their case. In their view, these factors make a recession unlikely, and they believe that the economy may be poised to rebound. They believe all of these factors point to an economy slumping toward recession.
Housing generally continues to be a bright spot in the economy.
During a typical post-war recession, housing shrinks dramatically due to declining consumer confidence and incomes, and is usually one of the first areas in which consumers defer purchases. This has certainly not been the case over the past quarter. Housing's strong numbers point toward an economy that is unlikely to slip into recession. In tandem with reducing interest rates, the Fed has accelerated money-supply growth. The Fed's increases in the money supply reinforce its move to lower interest rates.