Is a recession coming?

bySupernonsens

120 followers

Updated 6 years ago

Good News!

With unemployment at 3.9 as of May 4, 2018, according to the Federal Bureau of Statistics things appear to be on an upward path.

However, many economists agree that we are in an upward spiral that will CRASH by 2020.

Most agree that the following will occur sometime between end of 2018 and early 2020. Interest rates will soar to 8% making consumer spending difficult especially for any major purchases like housing.

The National debt will add ONE TRILLION dollars making it necessary at some point where the United States will have to raise taxes or cut benefits and program that many people have come to rely on - or some combination of both.

Many Americans under 50 are likely to face some pain from this, and the under-35 population will likely be especially hard-pressed to pay more to the government while getting back far less than their parents and grandparents did. Spending on everything from Social Security to roads, research and schools could potentially decline.

Global growth is projected to slow, major economies such as the United States, China and the European Union begin to cool, according to the World Bank. IMF listed several factors that could drag on growth, including rising protectionism, escalating political and trade tensions, and "waning popular support for global economic integration."

Bill Gates is quoted as saying "yes, it is hard to say when but it is a certainty".

So why is this happening?

All sources agree that it is not ONE reason but a number of factors in combination; such as the natural occurrence every 8 years or so; as experienced in previous recession cycles.

Another major factor is excessive consumer debt. The average American owes $6,375 in credit card debt while the average family owes over $16,883 in. In 2017 the consumer debt reached over ONE TRILLION DOLLARS in debt.

Business is finding alternative work arrangements - gigs, temporary, no benefits, low wage jobs thus reducing cost. The second work arrangement is part-time working, no benefits, minimum wage jobs with workers easily replaced thus removing the pressure of providing higher wages or wages. Even full-time workers are often working without benefits at minimum wage which increases the need for government benefits. Often in the form of food and medical. One of the reasons for fewer protections for the full-time workers is the unions reduction of power.

The new tax bill which reduces taxes to corporations and individuals means less money being paid to operate the government; however, combined with the work arrangements being utilized by business an increase in benefits is paid out by our government.

The stock market is fluctuating wildly due to unsure government policies that affect business regulations.

importing of foreign products has created a lower demand for goods made in America thus creating a rise in consumer prices.

A concern that China holds 20% of our holdings which is $1 Trillion plus real estate, throughout the United States is estimated to be worth 300 BILLION DOLLARS.

The unrest and uneasiness of nuclear weapons in N. Korea and the possibility of a conflict creates an uneasiness and uncertainty within world markets.

According to Alan Greenspan the Federal Reserve has four general areas of responsibility;

1. conducting the nation's monetary policy;
2. supervising and regulating banking institutions and protecting the credit rights of consumers;
3. maintaining the stability of the financial system; and
4. providing certain financial services to the U.S. government, the public, financial institutions, and foreign official institutions.

They are responsible for raising and lower interest rates. If the Federal Reserve raises interest rates too fast and the economy cannot absorb the increases we have inflation. It is Federal Reserve job to balance the rate - picture a Ferris wheel, going up and dropping down and FR controls the ride. The ride can be slow and steady but if they speed up the ride some fall off)

What are the results?

the overall effects are the same; however, it varies by degree depending upon your personal situation. Debt ratio, employment status, standard of living, economic situation, savings, etc.

A recession usually means less income which leads to a lower purchasing power which leads to layoffs and increased government spending. As I mentioned earlier benefits increase in the form of unemployment insurance, food and medical. Eventually leading to high taxes or less government services.

Obviously, since cost of living has increased, savings is decreased to maintain otherwise it results in a lower standard of living. Employment is down in various industries including housing and manufacturing are usually hit the hardest.

So how do I protect myself?

There are several ways to protect yourself but as Benjamin Franklin said " spend less than you earn" but we all know that is not always possible. So below I discuss several options you have to prepare yourself for the possible recession due to hit by 2020. Start now.

By paying down your debt even a few dollars a month helps reduce the interest charged thus reducing the principal faster.

Forfeiting that extra expenditure will put a few extra bucks in the emergency fund. Let's face it Starbucks and a danish is almost $10 a pop, 5 days a week, that's $50 that could be used for an emergency. Treat yourself once a week. You deserve it.

Set a budget and stick to it.

A vast majority of us are wise investors but I read that invest only what you can afford to lose which seems pretty good advice to me.

INVEST IN YOURSELF! That means take a look at your skills are they marketable? Many of us were and are fantastic but sometimes outdated. Take a class, start a business at home, improve your skills.

From everything, I have read over the past several weeks and months there is no easy solution to protecting yourself from a recession, you can only prepare to ride it out by taking stock of your situation and then making a decision to move forward in preparation.

Conclusion

Two basic keys to preparing for a recession: Increase your CASH reserves while REDUCING your ongoing expenses. However, it is by observation that in order to increase cash and reduce debt it may be wise to invest in yourself.

Oftentimes, taking control is the best answer, which by the way, is what I did. I was one of those individuals who was deeply in debt at 74 years old. Retirement income just didn't cut it. So I went out and found a job, full-time and set every penny aside to pay off debt and put cash aside. I was laid off from that position after six months and found myself in the same boat, a little better of but still in deep water.

I went looking for a company that would hire a now 75-year old and found nothing UNTIL I found a company called Wealthy Affiliate. It was FREE to try it so what the heck. I signed up and found they didn't care how old I was they only wanted to help me make money. I took their FREE classes and realized this was something I could do from home, no driving, no additional expenses, and at by own pace (which I must admit was 12-14 hours a day, yes I am a workaholic) but it was great. I am not out of deep water, yet; but, I have the support of an entire community (not just a mentor who has several students to work with) to help me out when I am having a difficult time figuring out social media, terminology or just having a frustrating day.

If you choose to INVEST IN YOURSELF I suggest trying Wealthy Affiliate. It is an internet marketing organization with integrity, compassion and committed to helping others. Wealthy Affiliate is run by two super guys with the help of an entire worldwide community and best of all it is FREE to try. So you have no risk.

If interested, CLICK HERE. If not I hope the information I provide for you will assist you in getting through the upcoming recession. Drop me a note and let me know which way you decided; I'm into help others too.

Marylou Powers