Recessions are a normal part of the economic cycle, but they can be difficult to predict and even harder to navigate. However, there are several indicators that can signal that an economy is in a recession. In this blog post, we will discuss some of the most common signs that indicate a recession is on the horizon and some of the ways that you may know it's a recession long before The Fed or any economist does.
The usually drabble that is rolled when it comes to deciding we are in a recession -
1. Decrease in gross domestic product (GDP) for two or more consecutive quarters: GDP is the measure of the value of all goods and services produced within a country. A decrease in GDP for two or more consecutive quarters is a strong indicator that the economy is contracting.
2. High unemployment rate: A high unemployment rate is one of the most visible signs of a recession. It means that more people are out of work and are unable to find new employment.
3. Decline in industrial production: A decline in industrial production can signal that businesses are slowing down and cutting back on production. This can be caused by a decrease in demand for goods and services.
If the dishwasher is doubling as a washing machine, then you're probably in a recession...
4. Decrease in consumer and business spending: A decrease in consumer and business spending can signal that people are becoming more cautious with their money. This can be caused by a decrease in income or an increase in uncertainty about the future.
5. Increase in bankruptcies and foreclosures: An increase in bankruptcies and foreclosures can signal that businesses and individuals are struggling to pay their bills. This can be caused by a decrease in income or an increase in interest rates.
6. Decline in stock market prices and a decrease in overall market value: A decline in stock market prices and a decrease in overall market value can signal that investors are becoming more cautious. This can be caused by a decrease in profits or an increase in uncertainty about the future.
If you 401(k) feels like a 201(k), then we're probably in a recession...
7. Increase in the number of delinquencies and defaults on loans: An increase in the number of delinquencies and defaults on loans can signal that people are struggling to pay back their debts. This can be caused by a decrease in income or an increase in interest rates.
8. A decline in the housing market: A decline in the housing market can signal that people are becoming more cautious with their money. This can be caused by a decrease in income or an increase in interest rates.
It's important to note that the experience of a recession can differ between regions and industries. Additionally, not all indicators may be present at the same time during a recession. It's important to keep in mind that the above indicators are just a general guide and should not be used as the only way to determine if a recession is occurring. In any case, it is always good to be prepared and have a plan in place in case of an economic downturn.