The stock market has been hanging on to highs recently but economic data has been sending another message. With the focus being on the price of markets lately, I thought I would focus on some economic data that came out today and what I expect from future reactions. Pretty much, another recession box was checked today as the Philly Fed has finally fell below -30. This is important because we have never had a recession or massive amounts of unemployment without this index being that low. This doesn’t mean we will have a recession immediately, but now it would make more sense if the next shock caused the recession, as the macro-economic conditions can support it. Beyond that, if economic data like the Philly Fed keep cratering, there is a good chance we will see the jobs market react next. If that happens, that will be the last shoe to drop for the economy and we will probably begin the recession then. Essentially, if we start crossing these macroeconomic thresholds, we will soon see the market take bad jobs data as bad news. This will be the last shoe to drop in terms of recession so it will be interesting to see how long this all takes to develop.

I also go over the biotech’s from last week to end the video.

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The RECESSION Is NEAR

As global economies continue to navigate through uncertain times, there are increasing concerns about an imminent recession. Numerous economic indicators are showing signs of potential economic contraction, leading experts to warn that a recession could be just around the corner. While financial experts may not be able to predict the exact dimensions or duration of the next recession, there are several factors that are contributing to growing anxieties.

One of the primary reasons for the current economic unease is the ongoing trade war between the world’s two largest economies, the United States and China. Tariffs and trade barriers have disrupted supply chains, increased production costs, and weakened investor confidence. The trade war has not only affected these two countries but has also had a ripple effect on the global economy. Other countries, especially those heavily dependent on international trade, have experienced a decline in exports and a slowdown in economic growth.

Another worrying factor is the high level of global debt. Governments, businesses, and households have accumulated significant debt since the last financial crisis. This mounting debt burden could potentially trigger a downturn. As interest rates rise, servicing this debt becomes increasingly challenging, potentially leading to defaults and bankruptcies.

Moreover, stock markets have been exhibiting increased volatility, and some analysts believe it could be a harbinger of an impending recession. Market fluctuations have been fueled by uncertainties surrounding geopolitical issues, such as the Brexit process and tensions in the Middle East. These uncertainties have made investors nervous, resulting in sudden sell-offs and market downturns.

Furthermore, consumer spending, a crucial driver of economic growth, has shown signs of weakness. In times of uncertainty, individuals tend to reduce discretionary spending and increase savings, which can hamper economic expansion. Sluggish consumer spending combined with rising household debt levels creates a worrying picture for the future.

Central banks’ diminishing power to stimulate the economy is also a cause for concern. Interest rates have remained historically low in many countries for some time, leaving central banks with limited room to maneuver. With interest rates near their lower bounds, it becomes harder for central banks to use monetary policy to stimulate economic growth in the event of a recession.

However, the current situation is not all doom and gloom. Governments and central banks are likely to implement measures to counteract a potential downturn. Central banks might resort to unconventional monetary policies, such as quantitative easing, to inject liquidity into the financial system. Governments could also increase spending on infrastructure projects or offer tax incentives to stimulate economic activity.

Regardless of the preventive measures taken, it is important for individuals to be prepared for a potential recession. Maintaining an emergency fund, paying down debt, and diversifying investments can help mitigate the impact of economic downturns. Building a resilient personal finance strategy can provide some insulation from the effects of a recession.

While no one can predict with certainty when the next recession will hit, it is evident that the current economic landscape is ripe with risks. As governments and central banks strive to avoid an economic downturn, individuals should remain vigilant and take proactive steps to safeguard their financial well-being.