“Unfortunately, in a recession, the people who suffer the most aren’t the rich, but the wanna-be rich and the poor.” – Robert Kiyosaki
While it is impossible to know exactly when the next recession will hit, many economists are predicting that the next economic decline will be by 2020. According to the economic trend, we should expect to experience a recession every 10 years. We are currently in the 9th year of the expansion period, so we are due for another recession soon.
Below is a chart of the business cycle phases:
1.Expansion period: Growth period.
2. Peak: The economy is performing at its maximum output.
3. Recession: Economic decline.
4. Trough: The economy has hit its lowest point.
A recession is a significant decline in economic activities for six months or longer according to Investopedia. Some examples of economic activities include consumer spending, unemployment rates, real income, interest rates, and inflation.
Signs of Recession
A recession is generally caused by a mix of supply and demand jolts and economic activities that are shown below.
- Increased Interests Rates – CNBC economist has announced that the Feds are planning to raise interest rates at least two more times in September and December of 2018.
- Increase in Government and Consumer Debt – According to CNBC, the U.S. debt just passed $21.3 trillion and is continuing to grow. Increased debt leads to increased inflation rates to help manage the U.S. debt.
- Increase Trade War Tariffs – Recent taxes have been placed on foreign imports.
- Unemployment Rate Increase – The current U.S. unemployment rate is 3.9%. However, increasing tariffs and interest rates can cause businesses to lay off employees to save more money.
- Decrease Value in Assets/Housing Prices – Many self-made millionaires are created during recessions; they take advantage of low asset prices and invest.
Although it is impossible to predict the next recession, you can now recognize a few signs that may lead to economic decline. Financial experts often suggest getting a second job to help combat the decline in economic activities.
