Editor’s Commentary: Is recession coming? Are we already in one? What do inflation, rate hikes, job markets stumbling, global currencies teetering, supply chains collapsing, retail sales plummeting, food shortages, energy crises, and other economic indicators tell us?
I am not an economist but I talk to some pretty smart financial minds. I have to quote one in particular even though I hate using anonymous sources; her bosses don’t know she’s a “right-winger” and that knowledge could affect her career prospects. She texted me this morning, “A lot of economists are fearful that ringing the alarm bell will create a self-fulfilling prophecy, but tell your readers whenever we say ‘2024’ regarding crashes and collapses we’re really thinking ‘2023’ but hoping to stave off the carnage a bit longer.”
It was an interesting quote that I had to reread a couple of times, not because it’s too complex but to grasp the undertones. “Crashes and collapses,” she said. “Stave off carnage,” she said. Sounds ominous. But as I said, I’m not an economist so I’m not sure what to make of it. I asked if she thought I should encourage people to buy precious metals in preparation. She texted, “Supplies first. Then gold and maybe silver.”
Again, ominous. We’ll see how it all plays out but I’m much less bullish about recovery than I was before the midterm elections. It seems like we’re in for some very troubling financial times ahead in this nation and around the globe. When they say 2024 for recession or any other bad economic conditions, assume it’s already here while hoping it never comes at all. Here’s Peter Svab from our premium news partners at The Epoch Times with a complete breakdown of what one economist has been predicting…
Recession Coming in 2024: Economic Forecaster
“We see this year that the Fed pushes too hard too fast.”
American industry will slow down next year, then fall into a recession the year after, according to ITR Economics, an economic forecaster.
“We’re still calling for more of a slowing growth cycle in 2023, but the original soft landing that we were calling around the end of 2023 now looks like it’s turning into a hard landing in 2024,” Patrick Luce, an economist with ITR, told The Epoch Times.
A key indicator that made ITR change the forecast was the inversion of treasury rates. In July, the 10-year treasury yield sunk below the 2-year one and the inversion has been growing since. Such an inversion signals that investors are wary of the economic situation in the next few years and it historically tends to happen 12 to 18 months before a recession.
Luce blamed the bleak outlook on the Federal Reserve’s aggressive raising of interest rates this year, from virtually zero in March to more than 4 percent now.
“We see this year that the Fed pushes too hard too fast,” he said.
“These impacts, they don’t happen overnight. They take time to manifest themselves in the broader, macroeconomic sense.”
Fed Chair Jerome Powell has been saying for months that rates need to stay higher for longer in order to tame inflation. Inflation escalated from less than 2 percent in early 2021 to more than 9 percent in June. It has since moderated to 7.1 percent in November.
The increase has been attributed to several factors, primarily the gigantic government spending during the COVID-19 pandemic, as well as supply chain disruptions caused by the lockdowns instituted in response to it.
The combination of the two factors “bottlenecked the system,” Luce said.
Other issues cited by some experts as affecting price inflation have been the restrictive domestic energy policy of the Biden administration and the war in Ukraine. Powell has stressed that the Fed has little power over the supply side of the economy, but that he can try to close the production-consumption gap by taming demand.
The problem is, by the time the Fed is satisfied that inflation has been quelled, it may have already tightened the monetary policy too much.
“These impacts, they don’t happen overnight,” Luce said. “They take time to manifest themselves in the broader, macroeconomic sense.”
Effects Lagging Behind
In its analysis, ITR likens the economy to a train. The cars in the front see the impacts of what’s to come first, while the rear cars are responding with a lag to trends already well underway in the economy.
“The financial sector leads the economy. Housing market, specifically single-unit housing, leads the economy,” Luce said.
Then come indicators such as new orders and industrial production. Further down is wholesale trade and then retail. At the rear of the train are consumer prices, which is exactly the indicator the Fed is trying to affect, Luce pointed out. In the housing sector, the upcoming recession is already evident, he noted.
Higher interest rates immediately throttle lending which then quickly hits the housing sector, which is sensitive to mortgage rate movements. Housing permit issuance was down about 11 percent year-over-year in October, leading ITR to consider the sector already in recession.
“That contraction is already underway,” Luce said. “It is our expectation for that to continue throughout next year and even into the first quarter of 2024.”
“As that federal funds rate peaks and if they start to bring it back down, that will also give easing to that affordability situation within the housing market.”
Yet he doesn’t expect the sector to get pummeled as in the Great Recession of 2008.
“Inventories are much lower today then they were back in 2005–2006 as they were leading up into the Great Recession,” he said.
Meanwhile, homeowner vacancy rates are low, homeowner occupancy rates are high, and people seem to still have enough income to pay their mortgages.
“The consumer’s ability to service debt right now and household ability to service debt right now is very strong,” Luce said.
What’s weighing housing down are very high prices. ITR is expecting the Fed to get rates up to about 5 percent and then stop the hikes around March–May next year.
“As that federal funds rate peaks and if they start to bring it back down, that will also give easing to that affordability situation within the housing market,” Luce said.
He noted the housing market particularly depends on locality, meaning some areas will likely see major crashes while others perhaps a mere slow-down.
Recession in Tech
Tech is another sector that will see the recession arrive early, ITR predicts. The industry was “stimulated over trend” during the pandemic and is therefore “more susceptible to the pullback in kind of that post-COVID era,” Luce said.
The rest of the economy is likely to sink into a recession in early 2024, albeit a relatively shallow one, ITR expects. From a GDP perspective, the recession may resemble the “flat and bouncy” one of 2000–2001, Luce said.
From industrial production perspective, it would be close to the recession of the late 1960s or early 1990s. “Definitely more mild than what we saw during the Great Recession,” he said.
The recession wouldn’t cause deflation, he explained, but rather “a temporary reprieve” in inflation.
For the rest of the decade, ITR expects inflation to remain elevated. For one thing, Americans are getting older on average, which means a shrinking labor pool and upward pressure on wages. In addition, during the pandemic, many people who were working despite retirement age have called it quits and don’t seem to be coming back.
“When I look at the labor force participation rate, the majority of demographics are back on trend, but folks over the age of 65 especially haven’t gotten back to that participation rate from the COVID era,” Luce said.
Moreover, the pandemic and lockdown woes have prompted an “onshoring trend” of companies reducing dependency on foreign supplies and bringing production to the United States. That also boosts domestic labor demand.
A shift toward higher inventory levels to bridge over potential supply disruptions is also inflationary as it kills some capital productivity.
“Those trends are real and we’re feeling them,” Luce said.
If the Fed insists on its mandate to keep inflation around 2 percent, it may run into “structural” factors “providing more inflationary pressures above that 2 percent level,” he said.
The ITR forecast assumes the job market will remain “strong enough to support ongoing real income growth” and that food prices will “moderate or come down,” Luce said.
Another caveat is that ITR bases its forecasts on market forces—it doesn’t try to guess what the government may do, for example, in response to a recession.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
