Recession session recession?
A recession a recession?
With all the talk of a possible
possible recession, it immediately
makes your mind go back to 2008.
The financial crisis where so
many people lost their jobs.
Lots of folks were kicked out of their
homes and your retirement account
dipped so low you thought you would be
working way past your 100th birthday.
So we all want to know is 2022
headed for a repeat of 2008?
Are we on a crash course
for another big recession?
I've Ben Briscoe from now until six.
We're gonna dig into the health of our
economy starting with getting on the same
page about what officially is a recession.
The Federal Reserve says a recession
is a significant decline in economic
activity spread across the economy,
lasting more than a few months.
Normally visible in real gross.
Domestic product real income employment,
industrial protection and
wholesale retail sales.
That's a whole lot of fancy
pants economic words, isn't it?
Think of it this way,
when a recession happens,
the economy screeches to a halt
for the span of several months,
people lose jobs, demand plummets,
and wages could get cut.
Economists say that is not
where we are right now,
but it could happen.
Many consumers are buying fewer goods.
Daniel Peterson is chief economist
at the Conference Board that analyzes
trends and manufacturing housing.
The stock market, even the movies
and issued the leading economic
indicators report Friday, take
away is that look, there's,
there's trouble ahead that that's
something that we shouldn't ignore.
But right now, things are more or less OK.
Most people are working
the unemployment rate,
which is something lots of people.
You pay attention to is very low.
It's 3.6% and not only in most
people in the United States working,
many people are seeing wages rise,
a steady paychecks, helping consumers
to keep consuming even as they
pay high inflation driven prices,
while the leading economic
indicators is telling us no,
we're not in a recession right now,
but the reason why some people are
saying that is because it may feel
like 1 inflation is super high
and a lot of that's being caused
by factors that are arguably.
Outside of the United States,
Russia's war in the Ukraine is a key
factor worldwide and won President Biden
called out when he hosted the major
Economics forum from the White House.
And with Russia's war driving up inflation
worldwide threatening vulnerable
countries with severe food shortages,
we have to work together to
mitigate the immediate fallout of
this crisis in the United States.
I'm using every lever available
to me to bring down prices for the
American people, I don't think.
Recession is inevitable.
That was the top talking point for Biden.
Administration officials over the weekend.
Not only is a recession not inevitable,
but I think that a lot of people are
underestimating those strengths and
the resilience of the American economy.
But former Clinton Treasury Secretary
Larry Summers says he doubts those
economic strengths will be enough.
The dominant probability would
be that by the end of next year,
we would be seeing a recession
in the American economy.
That's a feeling shared by.
70% of economists,
according to a recent poll.
So we're not in a recession,
it's not inevitable.
It's also not impossible.
What should you do now to prepare?
Just in case?
Well, experts say it is hard
right now with high prices,
but try to put money away.
It's always good to have an emergency
fund and pay down high interest debts.
You may have less disposable
income if a recession happens,
so you want as little debt as possible.
The next big question online,
should you pull your money
out of the bank experts?
Urge you not to panic,
Consumer Reports says a savings
account is actually one of the
safest places to keep your money.
Federal insurance covers
up to 250,000 per holder.
That means married couples with a joint
account can have protection up to 500 grand.
If you got more than that in your savings,
well, that's impressive.
You should talk to a financial advisor.
They'll tell you the best ways
to protect your money next.
What would a recession mean for prices?
Will they go up or will?
They go down.
Experts say, historically,
prices drop in a recession 2008 resulted
in more than a 60% drop in gas prices,
for example.
That sounds great.
Economists say it's not because it also
means people are losing their jobs
when prices are slashed to get people buying,
companies have to find ways to cut cost.
Others might see an unexpected pay cut.
So many people also want to know should
we cash out our 401K before a recession?
Financial advisors say now is the best
time to maximize your 401K contributions,
not decrease them since the
market is doing poorly,
it's a chance to buy low.
There's a pretty simple rule to follow too.
Remember, the younger you are,
you can afford to take more
risk in volatile stocks.
The older you are.
Your portfolio has to be more
conservative with guaranteed fixed income.
Which some of your equity positions
to fix income, which isn't going
to give you a lot of return,
but it's going to give you a little balance
to make your portfolio a little safer.
You're not investing for the next six months,
you're investing for decades in the future.
You know that little devil on your
shoulder says, don't just sit there,
do something. I turn it around
and I say don't do something.
Just sit there.
Next up, should you sell your
house before after a recession?
Well, it's no secret prices have been crazy.
Demand has gotten really high as
we moved out of the pandemic and
that drove prices through the roof.
Don't just take it from us.
Christina Hargrove is a real estate agent.
She's also trying to buy a house.
She said it is keeping her up at night.
Trying to find a house with the
mortgage prices going up and
gas prices and everything else.
It's just been a bit of a
bit of a nightmare, honestly.
Morgans rates also just hit a 30 year high
between higher prices and higher interest.
The average home buyer pays 500 bucks more
per month now than they would last year,
or 189 grand more over a 30 year loan.
That creates a significant affordability
challenge not only to have very high
rates of house price growth,
you also have now you know a pretty
rapid increase in mortgage interest rate.
Balancing market has two
big issues for home buyers,
high prices and low supply.
Some people have called it a housing
bubble and they worry that this
thing it's going to eventually burst.
The good news.
We talked with several economists.
They all say there was no
housing bubble to begin with.
For a housing bubble to exist,
we will have to to argue that
people are rather believing in
some kind of story about the price,
why the price of the House should be
that high rather than ignoring the
economic fundamentals that would cause
the price of a House to be so high.
And in this case,
I think the economic fundamentals justify
the increasing prices that we've seen.
He says home buying rules changed after
the 2008 recession and market collapse.
That makes a housing bubble
less likely to form again.
That doesn't mean we won't see a big
drop in home prices if the economy
does take a tumble, we can expect
demand for houses to dry up fast.
That leads to a drop in prices,
realtor.com says.
If you're thinking about selling a home,
do it now.
You can sell high and try to
buy low when the prices drop.
Just remember, there is no guarantee
you'll be able to find an affordable.
Option right now because of tight supply.
Look, a recession might be around the corner,
but it's not necessarily gonna be there.
The best thing we can do is don't panic.
Stay calm.