On this week’s episode, Roger and Elias look back at how the markets reacted to the last 6 recessions. Plus a look at how consumers are behaving amidst high inflation rates.

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Hosted By: Roger Abel
Co-Host: Elias Randel
Produced By: Molly Nordlocken

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As we navigate through the current economic uncertainty, it’s important to take a look back at the last six recessions to gain a better understanding of the economic cycle and how it has impacted wealth. Recessions are a natural part of the economic cycle and have occurred periodically throughout history. Understanding the causes and effects of past recessions can provide valuable insight into how to navigate the current economic landscape.

The last six recessions in the United States occurred in 1980, 1981-1982, 1990-1991, 2001, 2008-2009, and 2020. Each recession was triggered by different factors, such as oil crises, housing market crashes, and financial crises. Despite the varying causes, there are common themes that emerge from each recession that provide a deeper understanding of their impact on wealth.

The 1980 recession was caused by high oil prices and inflation, which resulted in a significant decline in GDP. This recession led to a spike in interest rates, which subsequently impacted the housing market and caused a decline in home values. Wealth was significantly impacted as home values plummeted and stocks tumbled. However, those who were able to weather the storm and hold onto their assets saw a recovery in the years following the recession.

The early 1990s recession was a result of a combination of factors, including a weak real estate market and a banking crisis. The decline in home values and an increase in loan defaults significantly impacted wealth, particularly for homeowners and investors in the real estate market. The recovery from this recession was slow, but those who held onto their assets saw a gradual increase in wealth as the economy stabilized.

The 2001 recession was driven by the bursting of the dot-com bubble and a decline in business investment. This recession led to a significant decline in stock values, which impacted the wealth of investors. However, the recovery from this recession was relatively swift, and those who held onto their investments saw their wealth rebound as the economy recovered.

The most recent recession in 2008-2009 was one of the most severe in recent history and was caused by a housing market crash and financial crisis. This recession led to a significant decline in home values, which had a devastating impact on homeowners’ wealth. Additionally, the stock market experienced a significant decline, further impacting the wealth of investors. The recovery from this recession was slow, but those who were able to hold onto their assets saw their wealth slowly recover as the economy stabilized.

The 2020 recession, caused by the global COVID-19 pandemic, has had a significant impact on wealth as well. The stock market saw a rapid decline, impacting the wealth of investors, and many individuals experienced job losses or reduced income. The long-term impact of this recession on wealth is still unfolding, but history has shown that those who are able to weather the storm and hold onto their assets will likely see a recovery in the years to come.

In conclusion, looking back at the last six recessions provides valuable insight into the impact of economic downturns on wealth. While recessions can have a significant impact on wealth, history has shown that those who are able to hold onto their assets and weather the storm will likely see their wealth recover as the economy stabilizes. It’s important to remember that recessions are a natural part of the economic cycle, and understanding their impact can help individuals and investors navigate the current economic uncertainty with greater confidence.