Since we aren’t seeing a cool down of the heatwave in LA, let’s cool down the recession talk especially if you are a Real Estate Professional or are in any Real Estate “related” or “ancillary” field such as Lenders. I personally find that this is the most counter-productive attempt at getting attention for the wrong reasons.
In case you are wondering, this post was inspired by, or should I say is in response to, a “featured” Active Rain post. And in my opinion it should not have been. Rather, this post should have found its own natural death by a lack of support and lack of comments from the Active Rain community, but what do I know. To be clear, this is not a political post, simply a response to a great deal of bad information the featured post was providing.
In actuality, there has been a tremendous increase in the volume of these types of forecasts on most platforms; sadly, most are partisan driven. The writers are hoping that an economic slowdown will defeat our current president and give them an edge. Maybe these writers forgot how painful it was to survive and thrive in the last recession. So why work towards a “self-fulfilling prophesy”?
Let me be clear “Hopes and political motivation do not make for sound economic forecasts”, no matter how articulate and how convincingly the authors back up their positions with the “yield curve”. Let’s look at what people in the financial world had to say:
“The inverted yield curve is slightly suspect because this time it’s for a separate reason,” said Art Cashin, UBS director of floor operations at the New York Stock Exchange.
The difference, he said, is that past inversions came when the Fed was tightening policy, while this has come during a loosening period.
“…consumers remain in much better shape, particularly domestically…we see little evidence to suggest a recession is on the horizon…”(Robert Sharps Group Chief Investment Officer T. Rowe Price Blue Chip Growth Fund)
“…Happy birthday to America’s longest-ever economic expansion…in U.S. history. And the good news continues. Third-quarter numbers will set new records…but rather than partying most pundits are preparing eulogies. This expansion is too old, they fret. Wrong! Economic cycle don’t die of old age…Ken Fisher (founder and executive chairman of Fisher Investments)
Now if you are a multimillionaire and are politically opposed to the current regime, I get it, you are not affected by this. Clearly, you will be fine and not only survive - you will prosper. You do not need to give up your $300 bottles of Champagne and $500 dinner tabs and you can continue to take limousines and private jets to your parties.
What a poor motive to ruin the entire country’s economy. Seriously - have people forgotten what a difficult time it was for the middle-class working people during the last recession? They were the ones who had to face and deal with the last recession. They are always the hardest hit. And have we forgotten how many Real Estate Practitioners had to find other jobs or augment their livelihood to survive and maintain their business?
While the rest of us are trying to pay our monthly bills and manage our mortgage, we are the people for whom these well-intentioned people seem to care for on the surface, but will be hit the hardest.
Just to be clear none of the major institutional forecasters are looking ahead to a recession in 2019 or even 2020. The International Monetary fund reported that global growth is expected to expand to 3.5 percent in 2020 and the US economy is expected to expand at 1.9 percent. Most of the other projections come from the current economic indicators, none of which are signaling a recession in the months ahead.
The US economy has been expanding at a modest annual rate since the last recession. In 2016, the GDP expanded by 1.6 percent. Under the current administration, the GDP expanded to 2.4 percent in 2017; 2.9 percent in 2018; and over the past two quarters of 2019, the GDP expanded at a 2.4 percent annual rate.
The odds of a recession in the United States over the next two years do not appear to be very high since unemployment has been at its lowest in 50 years and the strong labor market has been downplayed.
I have long contemplated whether to write this post or to hold off. The straight-talking, knowledgeable Realtor in me said I must write the counterpoint. Ironically, this delay has supported my point even more.
According to a Realtor.com article published on August 26, 2019, 2% of economists, strategists and policy makers believe that there will be a recession this year; 38% believe it will begin in 2020; 25% anticipate one in 2021; while 25% believe one will begin in 2022.
I am not naïve to think that the odds of a recession can be changed if there are external forces such as massive terrorist attacks, oil embargoes or a sustained trade and tariff war between the US and China continue and go unresolved. The odds of that are not as high as one would think. So, without these external forces WHY push the “recession message”?
Well my friends, the answer is clear. Those that push this agenda do not care about your financial well-being. They are idealistically motivated under the “guise” of caring for you”. I have been a free thinker since I was a child, you should be too and do not believe or push the “false prophets”.
If you are looking for a knowledgeable, focused and goal-oriented Realtor in the Beverly Hills area who will help you achieve your Real Estate goals, please reach out to me directly!
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