The Recession is Here

“If it looks like a duck and quacks like a duck…”

If you look at the textbook definition of the word, we are officially in a recession. 

Signs that the recession is here.

But if you listen to what some of our nation’s leaders have to say, we aren’t quite there yet. 

To recap, a recession is “two consecutive quarters of decline in a country's Gross Domestic Product (GDP).” 

That happened last week, with the commerce department announcing that the country’s GDP decreased by 0.9% over the last three months. That comes on the heels of a 1.6% decline in the first three months of the year. 

We’ve known this was coming for a while now. President Biden tried to get in front of it last Monday, saying that he didn’t think we were going to see a recession. There was even language on the White House website a week before the report’s release to try and convince the country that there was no recession even in the face of two consecutive quarters of decline.

How do economists determine whether the economy is in a recession?

Even after the official numbers were released, the President stayed the course and insisted the country wasn’t in the middle of a recession. His aides and other administration officials have been carrying out the same mission. “Everything is fine,” is their message — despite the evidence that points to the opposite.

Why move the goalposts? 

Well, midterms will be here before you know it, plus consumer confidence is already low and sinking lower. The word recession, for many people, invokes the specter of 2008. Regardless of whether or not this recession will mirror that one, many Americans fear that will be the case. And as we know, in politics as in many areas, optics are everything. 

It’s the latest in a line of missteps the administration has taken in communicating the economic state of affairs with the public. Remember when inflation was “transitory” just a few short months ago? This could be seen as just another version of that. 

Will the American people buy it? 

It’s unlikely with inflation still draining accounts and the Fed’s recent rate hike making car loans, mortgages, and credit card debt more expensive. 

The White House might try to combat those fears by pointing out that hiring is still strong. But that won’t mean much when many people — as many as two-in-five according to recent polling — believe that job losses are on the horizon. And with questionable job security comes a reduction in spending.

Again, there’s no telling if this downturn we’re in the middle of will be as bad as 2008, but the perception is there. In the eyes of many people, the nation’s leaders aren’t doing much to make it better. 

In the end, it all comes down to protecting your own money. From the bear market, from inflation’s bottomless appetite, from ineffective policy, from the Ghost of 2008.  

All of these actors seem to conspire to take what you have and leave you with nothing. That doesn’t mean you can’t take steps to fight back. 

We’re in the early stages of whatever this is, so it’s not too late to be proactive in protecting what’s yours. 

You just need to look at short-term reality and compare it to the long-term outlook. That means watching the trends that got us here and taking note of just where they may end up.

The paths to getting there are shrinking in number, but you still have some options. 

Here are some plays you can make in the current investing environment to thrive no matter what kind of volatility the next few months hold.

Ryan Stancil

Ryan Stancil
Editor, Daily Profit Cycle