Economists know that recessions in the United States happen on average every six years. Yet a full nine years have now elapsed since the prior one (the aptly named Great Recession and Global Financial Crisis) concluded. Next year would mark the longest-lasting U.S. economic expansion in all of American history.
While economists feel like that economy is fairly strong today and might actually strengthen over the coming 12 months, they all pretty much agree that by or before 2020 the economic outlook worsens. The most optimal time frame in which to protect yourself against an economic malaise is in the heady last few months that come before hand. Chief U.S. Economist for Research Joel Prakken of Macroeconomic Advisers shared that:
“This is something that is clearly on the mind of many of our clients. We’re trying to alert our clients to the very real possibility of a downturn.”
Opinions are mixed on how severe the coming downturn will actually be. Some fear it will be even worse than the painful Great Recession of 2007 to 2009. This represented the most serious financial calamity to hit the U.S. dating all the way back to the Great Depression of the 1930’s.
In any case, it will surely be transforming as it causes substantial upheaval in the American job market, creates political turmoil for politicians who did not see it coming and struggle to get out in front of it, and massively revalues to the downside a good number of financial investments.
The situation is dire enough that Yahoo Finance has begun publishing a series of financial reports in which they are previewing the upcoming recession. They are addressing what it will look and feel like (painful), when it could happen (soon— within one to two years or less), who will suffer the most in it, and what will follow such a contraction next.
Yahoo Finance is also reviewing prospective changes to the job markets and actions employees can take now to improve their own odds of keeping their job and even advancing in the downturn. Their report also examines the effects of the future recession on equity investments, real estate, technology changes, and strategies for businesses coping with these changes. They will provide guidance to young workers who will likely be personally experiencing their very first full-fledged economic pullback.
Tight labor markets like the one we are in now usually predate recessions and even cause them in many ways. This chart on unemployment shades recessions in gray to illustrate:
What happens next is that wages rise with increasingly scarce workers. This causes firms to pass along the higher costs into their services and goods, leading to additional inflation. The Fed then gets fatally involved by raising its interest rates in a vain effort to get ahead of the problem of rising inflation.
The higher interest rates choke the economy as spending and investments decline precipitously, lead to defaults on loans, and stock values come back down. It only needs an external shock (such as the current asset bubble bursting, a negative government policy, or an oil price shock) for the economy to start officially contracting. This can easily then last from six months to several years.
Is Your Retirement Portfolio Prepared for the Next Recession?
As you can figure, a great number of these considerations are in place already now. The Fed is fairly aggressively raising its interest rates in a desperate attempt to normalize monetary policy. Wages and inflation are also rising. The good news is that you do not need to lie away at night worrying and wondering about how to protect your own retirement portfolio from the next recession. Gold has routinely safeguarded investors and their portfolios in times of economic contraction and even financial crises and economic collapse.
Click here today to receive your free and completely without obligation gold IRA rollover kit from the number one ranked gold retirement firm Regal Assets. This will give you all of the crucial information that you require to insure your IRA assets with a partial diversification of your retirement accounts into physically held, tangible gold.