How To Spot, Financially Prepare For A Possible U.S. Recession
There are multiple indicators of a still-healthy U.S. economy, but others that signal the possibility of a looming recession. What should you know about the national economy's ebb and flow and how to financially prepare for a recession?
The U.S. economy still has not made a full recovery from what's often called the Great Recession from December 2007 to June 2009. At 19 months, it was the longest economic downturn since World War II.
Two measures of economic strength are a low poverty rate and positive real estate sales. The national poverty rate has steadily decreased for four consecutive years and sales of real estate have increased year after year. Also, consumer spending is high and unemployment low.
But economists also see recession warning signs like a continued slowdown of the country's manufacturing sector, ongoing uncertainty related to Trump's trade wars, and negative spread between 2- and 10-year yields for the first time in more than 10 years. Last week, the Federal Reserve cut interest rates for the second time this year.
How many times in U.S. history has the country gone through a recession? What's the difference between an economic slowdown and a recession? What brings a country out of a recession or, if things continue to get worse, when does a recession become a depression?
What are the best financial practices during a recession's life cycle? What steps can be taken to mitigate the effects of this kind of economic downturn, and when should you start?
- Marc Giannoni, research director at the Federal Reserve Bank of Dallas
- Heather Long, economics correspondent for The Washington Post
- Keith Phillips, professor of economics in the College of Business at the University of Texas at San Antonio and assistant vice president of the San Antonio branch of the Federal Reserve Bank of Dallas
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*This interview was recorded on Monday, September 23.