Recession Is Closer Than You Think, And Here’s The Proof
If you were to ask some market optimists about the possibility the U.S. would officially enter a recession this year, one answer one answer is, “What recession?”
Another optimist writing for Forbes claimed that some economists forecasting a recession in the near future are “dead wrong.”
Still another optimist wrote a column asking, “Whatever happened to the big recession we’re supposed to have?”
Yet, despite their optimism (which, in all fairness, could be correct), a Northwest Mutual poll reveals most Americans firmly believe a recession is on the way this year:
Of course, polls just tell us what people like you and me, you know, not establishment economists are thinking. The question becomes whether the pessimism of the American majority is warranted.
Peter Coy took to the NY Times op-ed pages to confirm that, yes, a recession is very likely this year:
Okay, so this indicator worked once. We want a better track record than that!
A five-decade history of successfully identifying recessions? Now, that’s compelling evidence.
Compelling if your mind is open, at least…
Coy fairly points out in that the more optimistic economists claim indicators they disagree with, including the Leading Economic Index are “losing their significance” because the situation is “different this time.”
Apparently they forgot something.
Bloomberg’s July survey of economists, for example, believe there’s “a 60% chance the U.S. will fall into recession in the next 12 months.”
Recessionary concerns are bad enough – but that’s not all that’s on our minds these days. In fact, most people think that inflation will once again surge later this year:
Are the optimists too hopeful, or are pessimists too worried?
It’s hard to say! Anyone with a long-term view should be considering the entire economic cycle, the good and the bad.
So how do we do that?
The good and bad news about the economic cycle
The good news about recessions is they’re cyclical – just a normal and expected part of the economic cycle. Obviously, that means the bad news about recessions is they’re cyclical. Unavoidable facts of life.
Predicting recessions is easy! There’s always going to be a recession in the future. Pinpointing a recession is a challenge that economists have wrestled with for decades.
(Inflation is another story – greatly complicated by politics, but essentially it boils down to money supply. That’s not something we can easily anticipate.)
David Phelps provided a few handy suggestions to consider for getting through uncertain times like these:
Physical precious metals like gold and silver are generally countercyclical (benefiting from economic contractions), safe haven assets. Furthermore, physical precious metals are desirable as inflation-resistant investments.
So right now, it might be a good idea to take a few minutes to help yourself by learning more about ownership of physical precious metals. You can get all the information you need about both gold and silver for free to make an informed decision right here.
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