“US Heading for Recession?”
Ty J. Young Editorial

Several leading economists are predicting a recession may be coming. What is a recession? The traditional definition is 2 consecutive quarters of negative gross domestic product (GDP). GDP is the total value of all goods, services, and production from or by the United States, its citizens, and its businesses. Simple answer? Jobs, wages, production, manufacturing – everything related to the economy – decline in their output. As a country, we produce less, hire less, spend less – incomes decline, and jobs are lost. There is a defined, measurable, sustained downward movement in the economy.

I. When have recessions happened?

1) 2007-09: “Banking Crisis” – Banks were giving real estate loans to people who could not pay them back. The real estate market collapsed. The Stock Market went in half. Unemployment reached 10%. This was the cause and result of a massive recession.
2) 2000-01: “The dot-com bubble burst!” – With the newly established internet, people were rushing to invest their money with companies that had a “.com” behind their name. This created a stock market bubble, where the prices become inflated beyond their value. When people started selling, the market crashed and the bubble burst. This led to layoffs, wage loss, and a big drop in economic activity.
3) 1991-92: “Out with Bush, in with Clinton” – The 1990 Budget deal led to a large tax increase. In 1990-91, oil prices shot up during and after the first Gulf War and the Federal Reserve raised interest rates multiple times. These factors greatly hurt the economy, leading to a severe downturn in 1991-92. This recession was considered one of the major reasons George Bush senior lost in his re-election bid to Bill Clinton.

II. Why do economists think a recession is heading our way?

1) US GDP is down: US economic growth has been anemic for years and the trend line is down. 3rd quarter growth was down; it was down year-over-year, and it was below analysts’ expectations.
2) Global Central bank rate reductions: China cut its rates again last Thursday; so did the European Central Bank. The Bank of England and the Swiss National Bank both made statements on Thursday saying they were planning on cutting rates as well. Why is this important? If they’re cutting rates, that means they think their economy is in bad shape. Those are major economies, and major trading partners with America – their economies are linked to ours – and they are signaling they’re in trouble.
3) Disappointing data on most fronts: Consumer spending is down. Manufacturing is down. Wage growth is down. All are well below economists’ projections. Oil is a leading indicator, and its price has collapsed. Some stock data points are mirroring their behavior before the last two recessions of 2000 and 2007. For example, stock buyback volume on Apple and Microsoft are identical to the percentages they had right before the last 2 recessions. As Tom Cruise said in the movie A Few Good Men, “…I don’t know what all that means, but it sounds pretty bad.”

So what are the economists predicting? There are whispers that a recession is imminent. Recessions occur every 6-10 years and are part of the natural business cycle. Most of us have lived through one or even several recessions in our lifetime. But rarely have they occurred with such significant government intervention into the marketplace, massive government debt, higher taxes, and business-stifling regulation – all of which intensify the possible effects.

If we are to face the next inevitable recession, then you need to think about how your money is protected from market losses… and if it’s not, ask yourself how quickly can I get it protected. The answer to that question is one phone call away! 877-912-1919

(http://www1.realclearmarkets.com/2015/10/24/economists_are_whispering_the_quotrquot_word_172295.html)
(http://www.marketwatch.com/story/third-quarter-gdp-lands-with-thud-just-15-growth-2015-10-29?dist=beforebell )