Recession FEARS 2022 (Recession Or The Next Great Depression?) Ep 123

Do not believe the negative headlines when it comes to the housing market. Let me be the only 52 year old to tell you, that's cap. It's still a hot market, still home prices going up, still massive demand. But what about the coming recession that everyone's talking about? How is that recession going to affect housing? The logical answer for this would be home buyers to just back up and say, well, I'm gonna wait and see. It's time to discuss the recession and how it should affect your buying plan. Time to talk about the recession. Very exciting. Everyone out there has an opinion on the recession, so I'm going to do my best to just spit the real facts like I always do and let you make your own informed opinion. I seriously have no time for small talk. I've been in super geek mode. Absolutely hunkered down in the nerd cave doing tons of research for the last episode on inflation. And the recession episode gets so heavy, I'm actually going to break it up into two parts. So let's get started. What is a recession? Well, a recession occurs when there is less trade and economic growth. Neat, Dave, what the hell does that mean? All right, let me keep going. One standard defining factor of a recession is that we have a declining gdp. That's the gross domestic product for two straight quarters. If you are straight up brand new to all this, we break the year into fiscal quarters every three months, two quarters of the GDP dropping. Technically, we're in a recession. Now, we've already had that happen in 2022, so bam. That must mean that we're in a recession. Hold up. We're going to get to the analysis in a minute because everyone's trying to figure out, you know, are we in a recession or aren't we? This is a very Ross and Rachel moment. I'm serious. The economists are all out there arguing, are we on a break or not? Very, very different theories about that. Hookup with the cutie from the copy shop, friend Nerds. I hope you're with me. Okay, first let's figure out what the hell a recession is. And then we're going to figure out if we're actually in one or if the forecasts of a coming recession are on point. So first up, stop tripping. Recessions happen. You've been living in the biggest boom in history. Listen to episode 122 for my fantasy land truth bomb that I dropped about this crazy economy we've been having for the last 10 years. Cycles. They usually happen naturally in global markets. And in fact, this Cycle should have cycled already. We are seriously way past due. Shout out to all my OG homies that heard me talk about a coming recession in 2019. Yeah, way back in episode 29, I told you guys we are due. But hey, things kept rolling along. So it's time to make sure that you understand and realize that a normal standard regular economy is one that is cyclical. It goes up and down. There are peaks and valleys, expansions, contractions, highs and lows. There are dank times and weak sauce economies. Bull and bear markets usually happen in three, three to five year cycles. Up and down. Remember, a bull cycle is up because a bull jabs up with their horns. And a bear cycle is down because bears strike down with their claws. That'll help you always remember bulls up, bears down. So we have been in that up cycle, that bull market for a decade. And being in a bull market for over a decade, that. That is not normal. This is way too long. So again, I want to help keep everything in perspective. So, hey, all the millennials on TikTok that are freaking out about how you've lived through such crazy economic times, you'd best listen to the last episode in 122 where I dropped the truth bomb on you. If you listen closely and you understand the historical facts, you would be embarrassed by your recency bias. Embarrassed if you started making money in 2012, okay? Or anytime since then, you have only known an up economy. Now, I don't tell you this because I want to embarrass you for you being pissed off about all these terrible recessions that you've known about in your lifetime. I tell you this out of love. We've got another one coming, so let's be ready. Instead of angry, I want to help you win with the hand that we are all about to be dealt. I'm telling you this out of compassion and empathy. Drop the rage, release the anger, and put all that energy into education and preparation so that you can get the best best in whatever we're all going to be handed. So let's figure it out together. Are we in a recession now? You don't know you're in a recession until you're past it. Awesome. Typically, they don't officially report that you're in a recession until a year after it's passed. So that's why we are saying that this one, it's coming, but it might actually just barely be here in the summer of 2022. So more on that Ross and Rachel debate of are we or aren't we In a little bit, let's talk about some real economic history. This data is crucial and this is how all the ballers made their money in the past. See? Seeing what happened in the past and then using that data to work in the present for the predictable future. Write that down, make it a bumper sticker. Everyone with recency bias is freaking out because they've either been adulting or pre adulting and they remember that last fatty recession. I mean it was the second worst we ever had in 2008, only behind the Great depress. So let's dive into the history. This is how you're going to succeed in anything. Understand and know your history. Hitler was defeated because he didn't study Napoleon. You don't understand that, Google it. Or you can watch the Battle of Wits and Princess Bride because Vicini mentions it too. The first rule, never have a land war in Asia. According to the National Bureau of Economic Research, there have been 19 recessions in the United States with seven of them from 1854 to 1945. Now I know what you're wondering. What the hell do those have to do with anything right now. Well, there was an industrial revolution in there somewhere and we're kind of going through what has been another technological slash industrial revolution over the last 25 years. But I digress. We won't use those seven. From 1854 to 1945, those recessions were in a slower moving economy and a slower moving society. And of course it was pre the tech boom by you know, 50 or 200 years. So those recessions lasted an average of 21 months. Now since 1945, so 21 months on those old ones. But since 1945, up to the last one we had in 2008, we've had 12. So that means that they're actually happening a lot quicker because from 1945 to 2008 we had 12. They also end quicker and that's because of this new larger sized economy, the amount of money that we have in the system and of course the technologies involved and the new speed of the society. So since 1945, recessions only last 11 months. So things are worse working the way they usually do. The regular pattern is three to three and a half years of growth followed by 11 months of recession. That's the correct formula to keep the pot from boiling over. So you want to know what's going down? Let's talk about the last four recessions. We had one in 1990, 1991, it was about eight months long. That was a recession that happened during The Gulf War, oil price increase. And then we had the dot com recession. It was in the late 90s to about 2001. That was the Internet and the tech stuff being so overvalued because everyone got so excited about it. And then boom, everything fell apart. But here's the deal, Leo. It was followed by seven good years of growth. Then we had the one you all remember, the Great Recession. That was 2008, technically December 2007 to June 2009. And we bounced back completely by around 2012, 2013. And it went straight up from 201213 till we hit Covid in 2020. And then we had a little blip and then we kept going. But that is actually our fourth recession. In 2020, we actually had a recession. None of us gave a damn about it because we were just trying to stay alive because it was called the COVID recession. Now that was fixed by the government printing money and that created inflation. Listen to episode 122 if you want to know everything about inflation. So thanks Adoni. What the hell is this history lesson do? Well, here's the deal. Since 1948, every period of back to back quarters of negative growth, which is what we call moving forward into a recession, we've done the history and understood what happens when the recessions come to us. So now we've got to figure out if we're actually in one or not. Well, on July 28th we had a brutal gross domestic product, the GDP report. And it showed that the economy had contracted for a second quarter in a row, which led lots of people to insist that the much feared recession was already here. But the recession is already here argument. It's actually been undermined since that GDP report came out. There are so many other factors happening right now in 2022 that are making a lot of people think that it's here or not here yet. The economy is cooling off for sure, but like housing, it had to cool off since it was freaking white sun hot in 2021. And actually even in 2020 post pandemic, things have just been crazy for now. It does not appear to be suffering the kind of downfall that would actually qualify as a recession, even though we've got the GDP numbers that are going down. So let's discuss some of the indicators that are making this whole Ross and Rachel are we, aren't we thing really difficult to figure out. So yeah, we've got inflation, yeah, we've got the GDP numbers, but the economy added more than half a million jobs in July alone. The unemployment rate dropped to 3 1/2 percent. That's the lowest level since 1969. Now, inflation's been going up, this we know, but it actually chilled out in July for both the consumers and the producers. You want more information on inflation, go back to 122. Gas prices.