Type, “How is the U.S. economy?” into any search engine and you’re likely to get thousands of answers, none of them the same.

“It depends on who you talk to,” said Garrett Huerter, a financial advisor with Peace of Mind Financial Planning in Colorado Springs. “It’s one of those things where typically there’s some general indicators — you look at inflation, you look at the consumer price index, employment rates, what the housing market in general is doing and what consumer spending looks like. Those are some things that you can watch and try and pinpoint what the market is going to do.”

By most accounts, the U.S. economy currently looks pretty strong, with low unemployment and inflation rates — “not major indicators like we would normally have,” said Dustin Bench, a financial advisor with Altus Wealth Group in Colorado Springs.

One reliable recession indicator, however, is “blinking yellow,” according to a June report from Forbes — an inverted yield curve, meaning the U.S. three-month treasury bonds have a higher yield rate than its 10-year bonds.

While the inverted yield curve does not mean that recession is imminent, it does mean that fixed income or bond investors are concerned about the economy’s longer-term outlook and are willing to accept lower interest rates for longer-term bonds, Forbes reported.

“[An inverted yield curve] just means that longer-term treasury rates are starting to be lower than short-term rates,” Bench said. “That indicates uncertainty, and also that there are not a lot of safe havens in the world for people to put money.”

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That uncertainty likely stems more from concern about the global economy, not necessarily what is happening in the U.S., Bench said. President Donald Trump said this week that Washington and Beijing have a long way to go on reaching a trade deal, adding that America could place tariffs on an additional $325 billion worth of Chinese goods if needed, CNBC reported.

“There has been a slight slowdown in manufacturing, and that doesn’t necessarily mean that there’s a recession. That tells us a lot about [the fact that] there is some uncertainty,” Bench said. “In my opinion, that uncertainty is more around trade with China and what’s happening around the world, not necessarily what’s happening in the United States.

“I can’t really point my finger on anything else,” he added. “Everything else looks pretty good.”

HOW TO PREPARE

When the economic outlook begins to tick downward, many people’s first instinct is to liquidate all their assets and “weather the storm” using only cash.

This is also their gravest error, according to Huerter.

While some financial advisors favor a “time the market” approach to investment — the strategy of making financial decisions by attempting to predict future market price movements — research shows that approach is less effective than planning for the long term, Huerter said.

“I think the key — and this is one of the things that we focus on here — is beginning to prepare for a potential downturn in the market. The time to do that is not when it’s coming soon,” Huerter said. “The time is when you begin investing and planning for the long term.”

Huerter recommends the asset allocation strategy, which aims to balance risk and reward by apportioning a portfolio’s assets according to the investor’s goals, risk tolerance and investment horizon.

“If you’re set up to weather that storm, you are not potentially selling at a low and in turn locking in your loss,” Huerter said.  “We see people who get nervous for a variety of reasons and decide they want to move everything to cash. Then you have to ask, did you time it correctly, or when you go to re-enter the market, are you buying at a higher price now — in which case your dollars will be worth less — or are you buying at a low price and maybe missing out on a potential gain?

“If you weathered the storm, you are partaking in those gains rather than trying to guess at what point to re-enter the market.”

Investors should never make major decisions when the market is trending down, Huerter said.

“Right now there are a lot of things that are happening that are abnormal from what’s been shown historically. We’re in one of those odd periods right now, which just confirms our approach of, we don’t want to time the market based on those indicators,” Huerter said. “We don’t want to make any large decisions strictly based on any of the economic indicators.”

Now is a good time for investors to review their cash positions and make sure they have enough cash and liquid investments to meet their short-term goals, Bench said.

“Every recession I’ve been in, that’s what sneaks up on people,” he said. “All of a sudden they end up having to sell assets to create cash that they don’t want to sell.

“What I’m telling clients is, if they have gains in their portfolio, just to be prudent and make sure they have enough cash on hand for short-term goals, and they take gains where it makes sense,” Bench said. “It’s easy to not pay attention to your portfolio or your finances when things are good. I think it’s important that people listen to their financial advisors, pay attention to their financial plan, look at short- and long-term goals and make sure that in not only their investments, but also their savings, they’re positioned well.”

Managing debt never goes amiss either, Bench said. At the height of the 2008 downturn, homeowners, along with the entire economy, were over-leveraged with debt, he said.

“Debt is a hard thing to manage when there’s a slowdown — it’s hard for corporations, it’s hard for individuals,” Bench said. “Keeping a good eye on your debt and your leverage is a good way to protect yourself — make sure you don’t have too much of it.”

For some, lower debt may have meant avoiding a catastrophe in 2008, Bench said.

“In 2008, that was a deep recession, but it was really not a very long time. Since then, we’ve had a 10-year recovery period and banner years in the stock market,” he said.

“If people had lower debt in that year to 15 months, they would have been just fine, but a lot of people freaked out because they didn’t.”

While Bench’s clients often are hesitant to spend any time reviewing their portfolios when the economic climate looks promising, this is the ideal time to do exactly that, he said.

“None of us really know when anything is going to happen [but] this is the time you want to make adjustments is when things are good,” Bench said. “You don’t want to have to make adjustments when they are bad. And hopefully we’re a long ways off from that.

“Whether you expect things to continue being great or not, you should make sure that you’re prepared for that,” he added. “You can’t control what the market does, but you can control yourself and what you’re invested in.”