Is the Recession Here?

Four weeks ago, I was thinking about the negative GDP report for the first quarter. At the time, I thought to myself that having Q2 also report negative GDP growth seemed likely. This would mean that we are in a recession. (Typically a recession is marked by at least two consecutive quarters of negative GDP growth.)

The last recession was caused by the lockdowns at the start of the pandemic. It was very short-lived because the economic activity went so far negative that it took every little to improve.

Lately, on CNBC, I’ve seen a lot of the talking heads bemoaning the chance that the economy could enter a recession later this year or in 2023. They feel the stock market has been in the dumps for the past few months because of recession fears.

I feel, though, that the recession is already here. That the recession has been here for a while. People like to point to the “strength” of the economy as a rebuttal to this idea. Yet, I’ve seen many tech companies cut back on their open positions. And a few have even started to have layoffs. The economy is not as strong as it used to be.

Meanwhile, inflation is running very hot. It’s been over 8% the past two months. The cost of gas is double what it used to be just a couple of years ago. Grocery bills are much higher than they used to be. A lot of the basic expenses of life are more expensive than they used to be. Most people I know are starting to cut back on some expenses as a result. People change their behavior when things cost a lot more suddenly. This has to result in negative GDP growth; thus, we have to be in a recession.

But it’s not all bad, though. The stock market predicts the future; it is not reflective of current conditions. So once more people admit we’re in a recession, we’ll soon start hearing forecasts of when the recession will end. The stock market will start to move upward in expectation of the next growth cycle.

So in my mind, this is a great time to be investing in stocks. And in crypto. Just make sure you’re investing in companies that have good, growing businesses. Not every company will recover nicely.

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