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Is the ASX 200 safe from a recession?

Does it seem as though the ASX 200 (ASX: XJO) is now completely safe from recession?

Earlier this year I would have said there’s a fair chance we may have seen a recession by the end of FY20. But now that possibility is looking a bit less likely.

The combination of falling house prices, the trade war, proposed tax changes and rising debt levels made a downturn seem quite likely. But Australia keeps plugging along and now it seems as though it might not go through a true downturn at all.

The property market in Australia’s two key cities of Melbourne and Sydney looks as though there might be so green recovery shoots. Earlier in reporting season we saw Nick Scali Limited (ASX: NCK) report numbers that pleased the market and today we have seen JB Hi-Fi Limited (ASX: JBH) beat expectations and predict further revenue growth.

The bears may say this is just a lull before the next stage of the economic decline. But the numbers being reported are undeniable, there are some economic factors that are better now than they were over the past 12 months.

Worst-case scenarios do not often eventuate. There’s always a reason not to invest in the share market. But most of the time it is the right call to invest, even if things look uncertain. That’s not to say you should invest in any business and ignore the risks. The risks do need to be weighed up. Commonwealth Bank of Australia’s (ASX: CBA) and Bendigo and Adelaide Bank Ltd’s (ASX: BEN) reports show that not everything is on easy street yet.

Foolish takeaway

I’m still confidently investing into shares every month, just not ones valued at extreme prices and not cyclical ones either.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.