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Outside of inflation, the main topic of conversation in economic financial circles is the possibility of a recession…
What is a Recession?
A recession is commonly defined as a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
A recession results in rising unemployment due to fewer available jobs, as business are growing at a slower pace or even retracting. This can mean reduced wages & promotions, which has people spending less money, creating further pressure on businesses and individuals.
Will we have a Recession?
There are many signs pointing towards the U.S. falling into a recession. One particular technical indicator that has been reliable over the years is the interest rate spread between the 10-year Treasury note and the 3-month Treasury bill. Generally the longer notes come with higher interest rates. However, there are times when shorter notes can exceed rates of longer ones.
This “inversion” has been a precursor to the past eight recessions looking back over the past 60 years, without fail. That likely means the current inversion is a solid indicator we’re heading into a recession.
What can you do?
The best counter to possible increased prices and decreased/lost income is reserves. The more money you can have saved, the better you can weather the storm.
Many folks are starting to hunker down by spending less and saving more.
If you have questions regarding your situation, please don’t hesitate to contact us.