Tuesday, June 18, 2024

Are We Going Into A Depression

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Economic Recovery Is Not Like Flipping A Light Switch

Are we heading into a depression?

Anyone still suggesting this is going to be short-lived with a V-shaped recovery is taking an incredibly short-sighted macro perspective.

Theres a bit of naiveté and wishful thinking in the assumptions there will be a V-shaped recovery in third quarter. Much of the analysis to date appears to be based on information we have now without thinking through where we are going.

As someone who has first-hand experience in how challenging it is to build a small businesses, it seems like Wall Street economists are being unrealistic about how many small businesses will not survive the quarter and they make up about half of private-sector jobs.

Many millions of jobs will be lost this quarter and many millions will not come back.

These shocks are continuing to unfold and hence why we see forecasts continue to degrade. There are so many ripple effects exacerbating the downturn that are coming to light.

Even the stimulus itself has recessionary ripple effects. Mortgage servicers granting homeowners forbearance are still on the hook with investors to continue paying principal and interest on the mortgages. They also must make payments to mortgage insurers, property insurers and local tax authorities. This will spark a crippling cash crunch in the real estate finance industry unless the Federal Reserve steps in with even more emergency lending.

More adverse second-round effects on income and spending will come further down the road.

The economy is not a light switch.

Will The Us Economy Collapse

A U.S. economic collapse is unlikely. When necessary, the government can act quickly to avoid a total collapse.

For example, the Federal Reserve can use its contractionary monetary tools to tame hyperinflation, or it can work with the Treasury to provide liquidity, as during the 2008 financial crisis and COVID-19 pandemic. The Federal Deposit Insurance Corporation insures banks, so there is little chance of a banking collapse similar to that in the 1930s.

The president can release Strategic Oil Reserves to offset an oil embargo. Homeland Security can address a cyber threat. The U.S. military can respond to a terrorist attack, transportation stoppage, or rioting and civic unrest. In other words, the federal government has many tools and resources to prevent an economic collapse.

Press Pause On Buying A Home

It’s already a competitive housing market with few homes to go around. If rising mortgage rates are adding more pressure to your ability to buy a home within budget, consider renting for a little longer. If you’re also worried about your job security in a potential recession, then that’s even more reason to take pause. Leasing isn’t cheap at the moment, but it can afford you more flexibility and mobility. Without the need to park cash for a down payment and closing costs, renting can also keep you more liquid during a potentially challenging economy.

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The Great Depression In Three Weeks

3. Nouriel Roubini is a NYU professor and was the top White House economist in the Clinton Administration Treasury Department. He is less reserved in his comparison to the Great Depression. His analysis is troubling to say the least:

  • Stimulus-Induced Stock Crash? No, Housing Market Faces Real Freefall
  • The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis and even the Great Depression.

    He says in both previous episodes it took three years for the economy to crash as far as it nearly has in three weeks. He writes the current situation is far more dire than the Great Depression:

    Not even during the Great Depression and World War II did the bulk of economic activity literally shut down, as it has in China, the United States, and Europe today.

    The Importance Of Focusing On Yourself

    Teen depression: Mental health counseling, therapy offer long

    At our tranquil riverfront property, surrounded by picturesque rice fields and traditional Thai villages, you are completely removed from your triggers the people, places and things that contribute to your condition and immersed in a safe and soothing environment where you can focus wholly on healing. If you are slipping back into depression, please feel free to reach out to us at anytime for a consultation.

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    Watch The Yield Curve

    Another commonly watched market indicator is making analysts very nervous: the yield curve. This metric compares what investors can earn on short-term Treasury securities versus longer-term Treasury securities.

    In a healthy economy, investors demand higher yields on longer-term debt to compensate them for taking on longer-term risks. When the difference between these two yields shrinksas investors demand higher yields on shorter-term debtit may signal concern that tough times are around the corner.

    The yield curve has seen this exact scenario recently, suggesting that investors expect economic growth to slow in the future. Yields on shorter-term and longer-term Treasury securities have been converging, drawing comments from some quarters that the market may be signaling a recession.

    Seek A Second Income Stream

    Web searches for “side hustles” are always popular, but especially now, as many look to diversify income streams in the run up to a potential recession. Just like it helps to diversify investments, diversifying income streams can reduce the income volatility that arrives with job loss. For inspiration on easy, low-lift side hustles that you might be able to do from home, check out my story.

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    Who Officially Decides If Theres A Recession

    There will be plenty of people talking about a recession if the US economy turns.

    But the undisputed referee is a private, non-profit organization founded by industrialists in 1920 the National Bureau of Economic Research which has a committee of eminent economists.

    They meet regularly to look at a bunch of economic data and they decide ifthe current business cycle has reached either an economic peak or trough . Recessions are the periods between the peaks and troughs.

    Thoughts Of Death Or Suicide

    Robert Kiyosaki: “BE CAREFUL! We Are Going Into DEPRESSION!”

    A person with depression may think more about death and dying. They may also think about suicide and how they could end their life. These thoughts are called suicide ideation.

    Sometimes, a person may tell others about these thoughts. If someone is talking about death or suicide, this may be their way of asking for help, and it is vital to seek assistance.

    In severe cases of depression, a person may hurt themselves, or self-harm.

    Depression is a common but serious condition that can be life threatening. Not every person who thinks about suicide will attempt it. However, if someone mentions suicide, either contact a doctor or help them seek urgent medical care.

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    Why You Can Trust Bankrate

    Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

    Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and reviewed by subject matter experts, who ensure everything we publish is objective, accurate and worthy of your trust.

    It’s why over 100 million people not to mention top publications such as The New York Times, Wall Street Journal and CNBC depend on Bankrate as a trusted source of financial information every year.

    No Recession In 2022but Watch Out In 2023

    close up of chalkboard with finance business graph


    A recession will come to the United States economy, but not in 2022. Federal Reserve policy will lead to more business cycles, which many businesses are not well prepared for. The downturn wont come in 2022, but could arrive as early as 2023. If the Fed avoids recession in 2023, then look for a more severe slump in 2024 or 2025.

    Recessions usually come from demand weakness, but supply problems can also trigger a downturn. In 2022 demand for goods and services will be strong. Consumers have plenty of money, thanks to past earnings, stimulus payments and extra unemployment insurance. They have paid down their balances. Even though they also increased their car loans outstanding as they upgraded their rides, their general condition is good. Employment will increase thanks to the spending, reinforcing the income gains that enable expenditures.

    Businesses, too, have plenty of cash on hand. Not only have profits been good, but the Paycheck Protection Program gave nearly $800 billion to businesses. Companies want to buy computers, equipment and machinery to substitute for the workers they cannot find, and this spending will help manufacturers of the equipment.

    Homebuilders will construct as many homes as they can, though that will be limited by buildable lots, skilled labor and building materials. Non-residential construction will slowly gain ground, especially in warehouse space and suburban offices.

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    How We Make Money

    You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout lifes financial journey.

    Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.

    Were transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.

    Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.

    African Americans In The Great Depression

    5 Things You Should Never Say #depressed

    One-fifth of all Americans receiving federal relief during the Great Depression were Black, most in the rural South. But farm and domestic work, two major sectors in which Black workers were employed, were not included in the 1935 Social Security Act, meaning there was no safety net in times of uncertainty. Rather than fire domestic help, private employers could simply pay them less without legal repercussions. And those relief programs for which blacks were eligible on paper were rife with discrimination in practice, since all relief programs were administered locally.

    Despite these obstacles, Roosevelts Black Cabinet, led by, ensured nearly every New Deal agency had a black advisor. The number of African Americans working in government tripled.

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    Lock Interest Rates Now

    As the policy makers raise interest rates to bring down inflation levels, interest rates will increase. This potentially spells bad news for anyone with an adjustable-rate loan. It’s also a challenge for those carrying a balance on a credit card.

    While federal student loan borrowers don’t have to worry about their rates going up, those with private variable rate loans may want to look into consolidating or refinancing options through an existing lender or other banks, such as SoFi, that could consolidate the debt into one fixed-rate loan. This will prevent your monthly payments from increasing unpredictably when the Federal Reserve raises interest rates again this year, as expected.

    The Difference Between A Recession And A Depression

    A depression is a more severe recession. However, it’s a little tricky to concretely, quantifiably describe the difference between a recession and a depression, mainly because there’s only been one.

    Because economists do not have a set definition for what constitutes a depression, the general public sometimes uses it interchangeably with the term recession. However, the difference makes itself evident when you compare the Great Recession to the Great Depression.

    Note: While recessions are usually confined within a country’s borders, the Great Recession was felt globally. Additionally, increased globalization means that a recession in one country will not go unnoticed in the economies of other countries.

    Generally speaking, a depression spans years, rather than months, and typically sees higher rates of unemployment and a sharper decline in GDP. And while a recession is often limited to a single country, a depression is usually severe enough to have global impacts.


    The Great Recession lasted two years, from 2007 to 2009

    The only documented depression lasted a decade, from 1929 to 1939

    In the Great Recession, unemployment rose to 10.6%

    Unemployment during the Great Depression peaked at 24.9%

    Recessions are usually confined to an individual country’s economy

    The Great Depression was felt across the world

    GDP dropped by 4.3% during the Great Recession

    GDP dropped by 30% during the Great Depression.

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    Coping With A Depression Relapse

    Susan went to her doctor after experiencing many weeks of severe depression. Her doctor prescribed antidepressants which she took for 6 months. After that time, her doctor advised her to slowly take herself off the medication. Within a few weeks she was back to where she started feeling desperately hopeless about life. Unfortunately, like many mental health issues, depression can be complicated to treat and not all treatments will work for all people.

    The following treatments have been recommended by the National Alliance on Mental Illness:

    Therapy Both Mindfulness Cognitive Behavioural Therapy and Cognitive Behavioural Therapy have been proven to reduce the risks of depression relapse. These talk therapies help you work through your depression by changing the way you think and behave.

    Exercise High-intensity exercise releases endorphins which are the bodys feel good chemicals. Research by Harvard indicates that even low-intensity exercise is beneficial to fight symptoms due to its ability to improve brain function.

    Medication Studies show that taking antidepressants continuously for 6 or more months can make it less likely for you to fall back into depression.

    Where Are We In The Current Business Cycle

    Peter Schiff: “WE WILL GO INTO RECESSION IN 2022” // Inflation, Depression, Economy

    The best way to find out if we are in a recession or a depression is to understand where we are in the business cycle. A recession typically follows the peak of the business cycle. The peak is marked by irrational exuberance and asset bubbles.

    In early 2020, the U.S. economy entered the contraction phase of the business cycle. The 2020 recession was caused by the COVID-19 pandemic. The government closed non-essential businesses and urged people to stay at home to stop the spread of the virus. The economy contracted 5.0% in the first quarter of 2020. By April, there were 23.1 million unemployed, sending the unemployment rate to 14.7%.

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    Stock Market Crash Of 1929

    On October 24, 1929, as nervous investors began selling overpriced shares en masse, the stock market crash that some had feared happened at last. A record 12.9 million shares were traded that day, known as Black Thursday.

    Five days later, on some 16 million shares were traded after another wave of panic swept Wall Street. Millions of shares ended up worthless, and those investors who had bought stocks on margin were wiped out completely.

    As consumer confidence vanished in the wake of the stock market crash, the downturn in spending and investment led factories and other businesses to slow down production and begin firing their workers. For those who were lucky enough to remain employed, wages fell and buying power decreased.

    Many Americans forced to buy on credit fell into debt, and the number of foreclosures and repossessions climbed steadily. The global adherence to the gold standard, which joined countries around the world in a fixed currency exchange, helped spread economic woes from the United States throughout the world, especially Europe.

    What Is A Recession

    Simply put, a recession is when the economy stops growing and starts shrinking.

    Some say that happens when the value of goods and services produced in a country, known as the gross domestic product, declines for two consecutive quarters, or half a year.

    In the United States, though, the National Bureau of Economic Research, a century-old nonprofit widely considered the arbiter of recessions and expansions, takes a broader view.

    According to the bureau, a recession is a significant decline in economic activity that is widespread and lasts several months. Typically, that means not only shrinking G.D.P., but declining incomes, employment, industrial production and retail sales, too.

    While the bureaus Business Cycle Dating Committee declares when we are in a recession, that often happens well after the slump has already begun. Recessions come in all shapes and sizes. Some are long, some are short. Some create lasting damage, while some are quickly forgotten.

    A recession ends when economic growth returns.

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    A Recession Isnt For Sure Looming But It Feels Like It Is

    In early June, JPMorgan Chase CEO Jamie Dimon warned an economic hurricane is on the horizon, citing the Fed shrinking its balance sheet and the Russia-Ukraine wars impact on commodities prices in his reasoning. Right now, its kind of sunny, things are doing fine, everyone thinks the Fed can handle this, he said. That hurricane is right out there, down the road, coming our way. We just dont know if its a minor one or Superstorm Sandy.

    Like Musks super bad feeling, Dimon is tapping into the current mood many consumers, economists, and investors think there could be a recession on the horizon. In May, a Bloomberg survey of economists found theres a 30 percent probability of a recession over the next year. Many of the stock markets recent troubles can be tied back to recession fears and concerns that the Fed, in its attempts to fight inflation, will cause the economy to falter.

    Markets went from being like, Oh, yeah, soft landing, oh, yeah, the Feds got this, to Oh, my god, Sahm said.

    Despite some of the doomsaying, a recession isnt guaranteed theres a joke in finance that the stock market has predicted nine of the past five recessions. The Fed could get the economy to a Goldilocks state, where everythings just kind of fine. There are signs the hot economy could be settling, such as a slowdown in the housing market and some moderating wage growth.

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