Economic data doesn't indicate a recession is near, but predicting whether there will be a global recession is becoming “trickier with each passing day,” according to David F. Lafferty, senior vice president and chief market strategist at Natixis Investment Managers.

Although the bottom-line prediction from Natixis, a global investment bank and financial services firm based in Paris, still is that a recession is not imminent, there are warning signs, said Lafferty and Esty Dwek, Natixis Investment Managers head of global market strategy, in their mid-year review of the economy and markets.

Global growth is slowing and only “grinding upward” now, as Lafferty described it, but “the data has yet to indicate any type of U.S. or global recession. In fact, most of the data still points towards expansion. The numbers are unspectacular but still positive. Even so, recession is a possibility that investors may want to factor [it] into their portfolio decisions—perhaps hedging against it rather than betting on it,” he said.

U.S. consumer data remains solid, Dwek said, although tariffs may be a growing risk, depending on how quickly their impact filters into the broader global economies. Plus, there is seldom a recession in an election year and President Trump can be expected to do everything he can to prevent a recession during his re-election campaign, she said.

Both predicted continued positive returns on equities but agreed that volatility will remain a factor. For fixed income, Dwek said, “yields may go up a bit after being driven down so sharply in the first half of 2019.”

Lafferty noted, “We remain of the belief that much of the developed world is decelerating from synchronized global growth toward a slower, but still positive, long-run potential growth pattern.” He predicted the growth rate would slow to near 2 percent in the U.S.

Although they are expecting a positive bottom line for the rest of the year, Lafferty said, “We do see darkening clouds on the horizon. Many activity and confidence metrics have taken an ominous turn in recent months. United States and China tensions appear to be weighing on both trade and business investment.”

The inverted yield curve also could portend danger. “However, while the leading economic indicators have stalled, they have not turned negative yet. We continue to think activity is supported by solid employment and consumer spending trends, especially in the US. If we see more compelling evidence that these trends or other forward-looking indicators are faltering, we will become more bearish on the economy.”

The strategists also ventured a prediction in case they are wrong about an approaching recession and the factors that would affect its depth and duration.

“On the downside, it’s been well documented that central banks have less firepower at today’s lower rates. In this sense, the monetary policy response to the next recession will be handicapped,” Lafferty said. “On the upside, however, we see few if any major imbalances in the real economy and we believe systemic risks are better contained.”