What if all the recent attention and talk about a recession isn’t media misinformation?
What if it’s real?
Though it’s hard to believe we’re looking at a recession here in the U.S., given how strong consumer spending has been, how unemployment’s been scraping 50-year lows, how wages have been ticking higher, how accommodative interest rates are, and how strong the stock market’s been having just made all-time highs again in July, a recession is still a possibility.
At least that’s what mainstream news outlets are highlighting, that a recession is just over the horizon.
Breaking Down What a Recession Is and How the Media Knows It Isn’t
Technically, a recession is two consecutive quarters of negative GDP growth.
GDP growth in the first quarter of this year was a healthy 3.1%. In the second quarter GDP growth slowed to a 2.1% clip, a meaningful drop but still well above trend and nowhere near flat lining, and certainly a long way from turning negative.
And though I don’t see a recession developing, it doesn’t mean one can’t be manufactured.
What if the President’s detractors could manufacture a recession?
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The real question is why wouldn’t they?
They hate President Trump enough, and one sure way to dampen his reelection chances is to kill the economy that the President says his policies are responsible for ramping up.
It’s a dangerous play, as much as it’s frightening.
But what scares me isn’t a naturally progressing slowdown that ends up as a recession, even one lasting more than a couple of quarters, or even a manufactured recession.
Because a recession is just a recession and part of the normal business and economic cycles.
What frightens me is what could happen to the stock market if a recession is manufactured by the President’s foes.
It’s all about psychology.
If the President’s detractors infect the public’s perception of how the economy’s doing which impacts consumer psychology and confidence, it could quickly spillover into markets.
If investors start taking more of their profits off the table, if they park capital instead of putting it to work, if negative investor sentiment knocks stock prices down, selling could quickly cascade into a panic ahead of potential recession, which would make one almost self-fulfilling.
I’m afraid of a market crash.
The conditions are ripe for one.
And we’re getting closer to it being triggered as recession talk percolates to a near boiling point.
What worries me is how everything, everywhere has been inflated by so-called “free money” courtesy of central banks the world over. There are bubbles everywhere and they’re all connected, all linked to artificially manipulated rock-bottom low, and worse, negative interest rates.
Next week I’ll tell you how a recession’s being manufactured, by whom, who will benefit, and what you can do to make a fortune from the coming crash recession talk is going to trigger.
Until then, I want to hear what you have to say about all the recession talk, so let me know here.