{"id":8759,"date":"2022-08-10T15:22:39","date_gmt":"2022-08-10T19:22:39","guid":{"rendered":"https:\/\/thejackiejackson.com\/?p=8759"},"modified":"2022-10-25T10:51:22","modified_gmt":"2022-10-25T14:51:22","slug":"recession-fear-factors","status":"publish","type":"post","link":"https:\/\/thejackiejackson.com\/?p=8759","title":{"rendered":"Recession, Fear Factors"},"content":{"rendered":"

Are we in a recession right now? Is a recession on the horizon? These are questions that are looming over the heads of many Americans right now. In the news, there is a lot of discussion about the recession we are possibly in. However, we should understand what a recession really is and how to navigate one. In this article, we will explore the recession fear factors as well as how you can come out on top, even in the most precarious times.<\/p>\n

What Is a Recession?<\/h3>\n

The word \u201crecession\u201d is a media buzzword that gets thrown around, but what does it actually<\/em> mean? According to the National Bureau of Economic Research (NBER)<\/a>, a recession is a \u201ca significant decline in economic activity that is spread across the economy and that lasts more than a few months.\u201d The variables that they use to measure this include personal income (minus government transfers), employment, forms of consumer spending, and industrial production. However, since this committee depends on US government statistics that are reported, they cannot officially designate a recession until after it begins.<\/p>\n

On a global scale, there is no general consensus on what a \u201crecession\u201d is. The World Bank\u2019s main indicator of a worldwide downturn is when several major countries\u2019 economies start to contract at the same time.<\/p>\n

Signs of Recession<\/h3>\n

There are significant signs of a recession, aside from the 24\/7 news cycle. Even if you have no control over a recession happening, you can still be mindful of the signs ahead of time. There is no fool-proof way to predict a recession, but there are some tell-tall signs that it is around the corner.<\/p>\n

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  • High unemployment rates<\/li>\n
  • Cooling of the job market<\/li>\n
  • Lower consumer spending<\/li>\n
  • Businesses closing<\/li>\n
  • Low production of goods and services<\/li>\n
  • Struggling stock markets<\/li>\n<\/ul>\n

    \"\"<\/p>\n

    2020 and 2022 Recession<\/h3>\n

    The recession in 2020 was triggered by the COVID-19 pandemic. Ironically, this recession ended one of the longest periods of economic growth in US history. In 2020, unemployment skyrocketed, and businesses and whole industries where forced to temporarily shut down but government mandate. As Americans went into lockdown, retail sales had fell, and the stock market crashed. However, there was an initially recovery that led to several industries getting to pre-pandemic levels. This recession helped to set the stage for the 2022 recession.<\/p>\n

    Many Americans hoped that post-pandemic, there would be a boom in the economy. However, what we saw instead was inflation and supply chain disruptions and federal interest rate hikes. Consumers are feeling the pressure from the increased costs for everyday goods along with rising credit cards, mortgage, auto loan, and other interest rates. Higher interest rates have prevented companies from borrowing money to invest in innovation and growth.<\/p>\n

    Recession Fear Factors<\/h3>\n

    The word \u201crecession\u201d strikes fear into the hearts of Americans, especially those who lived through 2008 and now have the pandemic in recent memory. However, descending into a state of total panic and fear is not going to help you now or in the long run. There are ways you can prepare now that will support you during the recession.<\/p>\n

      \n
    • Build An Emergency Fund<\/li>\n
    • Take stock of what you have on you now \u2013 cash on hand, debt (credit cards, loans or student loans) as well as living expenses<\/li>\n
    • Focus on paying off debts and downsizing where necessary<\/li>\n
    • Build investments that are hedges against inflation<\/li>\n<\/ul>\n

      Hedges Against Inflation<\/h3>\n

      Economic slowdowns are cyclical, which means that more recessions will be in the future. Even if you aren\u2019t prepared for this upcoming recession, there will be more to come down the road. There are several types of investments that are hedges in a time of inflation and recession. Some of these include<\/p>\n

        \n
      • Reliable dividend stocks<\/li>\n
      • Precious metals like gold<\/li>\n
      • Real estate<\/li>\n<\/ul>\n

        Real estate in particular offers a lot of opportunities for investing even in a recession. The 2008 housing market collapse was rough, however, it did offer a boon of opportunities to real estate investors. Real estate acts as a hedge against inflation when recessions lead to stagflation. Stagflation is marked by high inflation and high unemployment. Additionally, real estate prices tend to keep up along with rising consumer prices. This makes real estate even more of an inflation-proof investment.<\/p>\n

        Is Real Estate A Good Investment During a Recession?<\/h3>\n

        During a recession, stock portfolios may drop temporarily. Even though downturns are not ideal, they do create opportunities for savvy real estate investors. Whether you already own real estate or are planning on investing in real estate, it is important to have a plan for a recession. Investing in real estate does offer some stability for investors when the economy slows down.<\/p>\n

          \n
        • Low correlation to stocks \u2013 Historically, real estate has a low correlation to the stock market. What this means is that even if socks are experiencing increased volatility due to a recession, it will not impact the real estate market as hard.<\/li>\n
        • Consistent Demand For Housing \u2013 There will always be a need for housing. Even during an economic downturn, people will still need places to live. If you are investing in houses or rental properties, you can still count on a stream of income from rent or mortgage.<\/li>\n
        • Recessions Create Bargains \u2013 Sometimes, recessions cause a \u201chot\u201d housing market to cool off. This can open up opportunities for investors to purchase properties at a discount.<\/li>\n<\/ul>\n