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August 10, 2022 at 02:12 PM
What You Need to Know
- Yet 68% of respondents expect a recession to last for a year or less.
- Only 20% say they're moving money out of the stock market to hedge against a continued down market or recession.
- Although inflation remains the top investment concern for 21% of respondents, 79% think it will ease by the end of 2023.
Nine in 10 traders think a U.S. economic recession is somewhat to highly likely, and 74% expect it to begin this year, according to Charles Schwab’s third-quarter Trader Sentiment Survey, released Wednesday.
Eighteen percent of traders cite the potential of a recession as their primary concern, up 6 percentage points from the second-quarter survey.
At the same time, 68% of respondents expect a recession to last for a year or less, and only 20% say they are moving money out of the stock market to hedge against a continued down market or recession.
Forty percent of traders say they plan to add money to their portfolios at the same rate as last quarter, and 59% say they are taking the same or slightly less risk this quarter.
“Recession fears surpassed domestic and geopolitical worries in the third quarter amid ongoing concerns about inflation,” Barry Metzger, head of trading and education at Charles Schwab, said in a statement. “Already though, we saw a strong finish for the markets in July.
“There is some optimism in traders’ outlook when it comes to the duration of a potential economic downturn, which most expect to be short-lived. And many traders are not taking specific action to hedge against a recession as they feel confident in their decision-making.”
The Trader Sentiment Survey is a quarterly study that explores the outlook, expectations and perspectives of traders at Charles Schwab and TD Ameritrade. The third-quarter poll was fielded from July 6 to July 18 among 968 active trader clients.
