And we are on the brink of a 2008 style financial crisis. Oh, we got to take out the needle for this one, because you know you may have heard a lot about recession lately, and it's likely that you're frustrated by the contradictory messages that you're receiving. One moment, there's no recession at all, the next, we're on the brink of economic collapse. It seems like everybody is playing tug of war with our lives, especially if you read YouTube titles Republicans want to convince you that the current Democratic Administration is absolutely a failing.

You know this is the unintended consequence of the Fed's monetary policy. uh, layered with really bad fiscal policy on top of it. While Democrats want you to believe everything is just a fine, really, we have a strong and resilient economy I know President Biden will talk about that. As you mentioned, the unemployment rate is at a 53-year low.

The truth is, they're both using our emotions to manipulate the narrative and it's time for us to finally take control of the conversation. So take a sip of coffee, buckle up and let's break down all of this so we can finally talk about what's going on with the recession and whether or not there are going to be some stemi checks. Because there is a scenario where the stemi checks start rolling again. So buckle Up.

So not only is the media sending mixed signals, but data from various sources points to really A Tale of Two Cities Consider this a Gallop A pole of this week cited that half of Americans said their financial situation was worse than it had been a year earlier, marking the most negative sentiment since the Great Recession. Meanwhile, the Consumer Conference Board's Leading Economic Index experienced an unexpectedly sharp drop, reaching its lowest points since November of 2020 and marking its 12th consecutive decline. This is the longest decline that we have seen since the Great Recession. and the fact is that as subprime lending Titans lenders are ramping up car repossessions to the point that the Wall Street Journal just reported repo companies are so excited yet still struggling to find enough workers that this could be the Christmas of repossessions.

Jerks. People are also changing their spending habits. Those who used to shop at Whole Foods are now more likely to shop at Walmart Sam's Club or Costco. They're opting for private label Brands like the Kirkland brand or the target Archer Farms brand.

However, not everyone has the luxury to do that they've already traded down. This reminds me of when I was a kid and we were losing our childhood home and I couldn't buy snack well, cookies anymore or any cookies for that matter because we were losing my childhood home and we had no money left. My favorite treats were no longer in the cart at all and this reminds me a lot of The Tale of Two Cities. See, this is sort of the bad tale, but on the flip side, you've got companies like Lvmh, the company that owns Louis Vuitton and Sephora reporting their last earnings that people are still spending like crazy and spending its quote soaring.

They say, you know what? what recession There is. no recession. But you know this mirrors what they said in September of 2008 right when Lehman Brothers went bankrupt. When Revenue finally bottomed out though for this brand, the Federal Reserve's bailout was already underway and the stock continued to perform well.

So once again, it's the poor and working Americans who suffer the longest while the rich pay the price for the shortest amount of time of these capitalistic. Cycles It really highlights The Divide between the bottom up and the top-down economy for adding to this frustration: Procter and Gamble is boasting about its ability to raise prices 10 year over year during their earnings reported last week, and at the same time, their Freight and input costs are dropping. but they're not passing those benefits on to Consumers they're handsomely rewarding their shareholders all while Republicans and Democrats sling dirt at each other. And really, the people who are the business owners and shareholders line their pockets.

And so this video is designed to channel our anchor to cut through the noise and provide you with the facts and strategies to navigate these uncertain times. We'll dive in to make sense of this economic roller coaster. and if you like this content, give it a like, consider sharing it with somebody who consider it motivation or useful or maybe providing some clarity. So what causes a recession? Well, to understand what's really going on, we've got to start by examining the causes of a recession, because today's data is so many that the Economic magazine The Economist at a great Brit which covers the United States all the time says our economy is much like the Mona Lisa Every time you look at it, you see something different and it's hard to understand what the hell is actually happening.

So hopefully by cutting through some of this, we can have some more clarity. So technically a recession is defined by two quarters of negative GDP growth. We already had that gross domestic product the sum of all the production of America already went negative for two quarters: 2022, Quarter One, and 2022 Quarter Two it's the first half of last year. Other factors: a combination of hard and soft data, paint a really blurry picture, and really everybody's kind of looking at like hey, National Bureau of economic research.

What are you going to tell us Like we're officially in a recession? And the reality is, if we look at historical data, they're going to tell you this. We'll tell you that we were in a recession two years after we were in a recession. So what good does that really do? This makes the economic picture pretty complicated. So are we in a recession? Well, according to the Bond Market and measures known as the inverted yield curve were bound to be in a recession Now in three months, six months or technically I Suppose we could break the trend and not go into a recession at all.

Although that would be the first time we've broken recession, we have no idea what the Bond market is telling us in terms of when we should be in a recession. Some say the third or fourth quarter of this year as people's savings run out, but then I try to chase down people's savings and this is absolutely freaky. See in my opinion, what could really lead us into a recession is when people run out of money because when people run out of money, they stop buying stuff like Pokemon mugs or needlers and that lack of spending from one person ends up leading to layoffs of another person who then can't spend money either. But the lack of savings was really propped up that Americans had throughout the pandemic, our average savings balance went from somewhere around five thousand dollars to an average savings balance of Thirteen thousand nine hundred.

Now that excess savings started to fall during 2022, as we would expect, and that's why everybody's saying that's it, we're going to recession. Average savings are going down, savings rates going down. We're screwed. Well, what ended up happening was those started to reverse, the savings rate started to tick up again and Bank of America just reported that individual savings not just new deposits from the banking crisis actually started rotating higher again.

Take a listen to this from Peak last April, it fell down a little bit over the course of the year, and it's built up over the first part of the year. it's slowly built up again. In other words, people's savings have built up again. This is where Robert Schiller a Princeton Economist comes in and suggests that consumers spend less as housing prices fall, which they did.

between May and December of 2022, home prices fell significantly, But then they started Rising again at the beginning of this year according to Redfin's Data Center which aligns with the rise again of savings, but that is not recessionary. On top of that, Bloomberg is now reporting that 77 of S P 500 companies the largest 500 in the world have that have reported so far have already beat expectations, which is unusual during a recession, so it doesn't seem like we're in a recession now. It also doesn't seem like we're really trending towards the recession of People's savings are growing up and down. So then we might look at job loss in the current economy is experiencing job loss.

We hear about it regularly. Madoff Hey, you know which is Facebook Amazon Google You hear about the layoffs all over the place, but apparently our economy has so many job openings through a measure known as the Joltz Indicator, the Job Openings and Labor Turnover Survey which suggests there's somewhere around 1.9 jobs for every person who's unemployed, which may explain why we hear of all these layoffs and the unemployment rate keeps going down. How are there more layoffs? But the unemployment rate goes down well. That means in aggregate, the economy is actually hiring more people than it's firing, which that makes you wonder: is this just a spring cleaning of Labor which is really insensitive to say, but it does make you scratch your head like is this just sort of a re-jiggering because maybe people are becoming more adaptable after all I think Americans are extremely hard workers and I think after covet.

We all realize that we value experiences with each other more, but we also got inspired to get our financial situation in order as much as possible. And even though over the past three years it's been tough and it somewhat feels like what God giveth God taketh away. People are resilient and so it's no surprise that we've been adding over 200 000 jobs on average per month for the last year. And so we can pay attention to unemployment as a recession indicator, especially since Elizabeth Warren is freaking out at Jerome Powell suggesting hey, if the unemployment rate takes up one percent, it's likely to take up two percent.

And that means a lot of people are going to lose their jobs. And maybe the unemployment rate is just a really bad indicator that we're in or going into a recession. In fact, there have been plenty instances where the unemployment rate has actually peaked and basically at the end of a recessionary cycle that is after the recession was technically deemed to be over. So maybe job loss isn't what we want to pay attention to.

Maybe there are other things to pay attention to like what the Federal Reserve is going to do and how the Federal Reserve is going to react. see historical data clearly links job lost recession, but if it's delayed information, then the procession could be over. We worried about a recession anymore. When the unemployment rate finally Peaks it's gonna be bad.

At least people are going to have to have lost their jobs and there are going to be things that you want to do to protect yourself in case that were to happen to you. So that way you're not in a bad situation. But well, let's understand instead how the Federal Reserve could potentially dictate the outcome of how bad this crisis is going to be. I Think there were three paths.

The number one path is that if the underlying disease of our economy is inflation and it ends up going away, then maybe the Federal Reserve is right. We could end up seeing a soft Landing. That is, if what the FED is fighting is the cancer of inflation, then maybe the Federal Reserve can actually land this economy and we could just normalize. Maybe all the scary data that we're seeing is just going from Euphoria to normal and we're leveling off.

And that's why we're seeing some negative data. And as long as inflation goes away quickly which there are three parts to that, part number one is Goods inflation. Part number two is housing inflation. Part number three is Services inflation.

we're already seeing the first one as long as that continues. And then we get housing disinflation. Rents finally start coming down. Or stabilizing.

Stop raising rents this freaking much. And then eventually we start seeing travel, entertainment, and and things like airfares start coming down. Then maybe the Federal Reserve could relax their policies. We could just go back to sort of a normalized environment.

Of course, if the disease is inflation and it turns out that we've over tightened and inflation ends up going away, then this is where we could actually and potentially see The Return of stimulus to help support the economy. see Milton Friedman tells us that inflation is a function of the money supply, but this isn't the entire picture. see Milton Friedman says look, inflation occurs when you print money, essentially when the money supply expands and while to some extent that's true, it hasn't been correct. But for one instance over the last 40 years and I want you to pay attention to this because it could show us why we might actually see stimulus checks again.

This is kind of mind-blowing So if you look at the M2 money supply over the last 40 years and we use the St Louis Federal Reserve's chart here to give us some insight into this. what do we find? Well, we find that we've had this gradual increase in the money supply for the last 40 years and we had no inflation. We had almost under two percent inflation, to the point where the Federal Reserve thought they might drop the inflation Target they had to 1.75 because we had so little inflation. But the money supply was expanding.

So why was there no inflation? and why did we get inflation recently? We got inflation recently because the rate of money supply expansion changed so rapidly. there. This is really for your fancy math nerds. the first derivative: the acceleration of your car.

We hit the gas so hard that our heads got flown against the back of the car. That is what caused inflation. just going from 0 to 60 at a normal pace and printing money like normal. Not saying the right thing to do is print money, but it's what happens.

Okay, cause no inflation. It was the oh God that caused the disease of inflation. And if that's the case, and we slowly and gradually start printing money again. Because right here, we should be expecting disinflation or maybe even deflation, which is certainly a Kathy Woody and argument.

But if that's the case, then it is entirely possible that we start seeing forms of stimulus again. and I think they'll be catered to very specific groups. For example, we might see stimulus checks again direct cash payments like those that were distributed multiple times during the Covet Pandemic whether it was twelve hundred dollars, fourteen hundred dollars, six hundred dollars. not in that order because the order was 1200 614.

But I would suspect that those whom there would be the biggest appetite to support would be our lower income Americans The Americans trying to get a leg up? Not everyone again, doesn't make sense. The income thresholds were too high last time. just like in California where California was sending people making half a million dollars a year at their family households stimulus checks in October of 2022. Well, we're experiencing some of the largest inflation ever.

But don't get me started on bagging on the Governor of California The second thing we might see is some form of expanded unemployment benefit. not something that's going to discourage people from working, but increasing the eligibility and maybe job training credits or direct payments to help you spend money on getting licensed, becoming a CPA investing in yourself to become a financial advisor or real estate agent. Maybe we'll see tax credits style benefits like that which don't have the direct impact of quickly printing so much money that we end up causing a second wave of inflation, but instead gradual support tools like supporting smaller businesses. The government could offer low interest loans or grants or really financial assistance programs to help these businesses stay afloat again.

Of course, other forms of stimulus that we are already seeing would be things like infrastructure spending to help massive projects in America get off the ground like battery factories or not just battery factories, but chip manufacturing or vehicle manufacturing to bring jobs back to America in addition to more tax Cuts or credits to encourage people to abide or be able to afford electric vehicles, we could see more of these. So that way, the agenda of our government and supporting people getting better jobs in either manufacturing or having skills uh, like becoming a realtor or CPA or a lender or financial advisor or buying an electric vehicle could be easier so we could see more of this targeted style stimulus and of course an expansion of direct payments for those making below I Would guess a hundred thousand dollars a year I'm gonna be below that six figure threshold so that way individuals could get twelve hundred dollar direct payments or however, to help them through the potential impact of the Federal Reserve having tightened too much as long as inflation goes away. But all of that goes to poops if inflation doesn't go away and see that's the third potential scenario from the Federal Reserve is that inflation doesn't go away now. I'm a big fan of already investing in companies like ship companies or energy companies because they are getting those stimulus checks.

I'm a big fan of that. However, there's no guarantee the stock market will do fantastic going forward. While I believe the economy is going through a Nike Swoosh style recovery where we bottomed out in October and we're up from there. While I have that optimism, there's no guarantee.

Look at this. Here is a JPMorgan chart suggesting that you should hedge the Federal Reserve's pivot because the reality is, if it's a mid-cycle pivot, stocks might go up. If it was a pre-recession pivot, stocks might end up faltering and going down. Barclays Reiterated exactly this, suggesting that when the Federal Reserve ends its hiking cycle this black line here in the middle, the stock market can pretty much do anything.

and if you go over here after the first cut which is this black line over here, the stock market can pretty much do anything. So there's no one set rule that says the Market's definitely going to go up or go down. I might have the opinion the Market's going to go up, but there's no guarantee you that especially. And this is scenario three for the FED.

If the disease of the FED is inflation and it's not gone with continued tightening, Buckle Up Get Ready for War and buy guns and ammo because things are going to get crazy as the Federal Reserve continues to hike interest rates further and really drives us into a deep dark recession. that is the scenario where maybe we get some form of depression now. I Don't think leading indicators suggest that because we see plenty of indicators showing that inflation is starting to fall, but prices are still going up and a lot of people ask me like, Kevin how could that be true How could prices still be going up? But inflation is going down well. the FED doesn't actually care to make your life easier or to make it cheaper for you to survive.

It's very frustrating. The FED seems pretty much employed by the rich people in America to make their lives easier and to make sure they get bailed out like when their Bank collapses. But what actually happens in the meantime? Well, the Federal Reserve is suggesting that hey, hey, your 100 carton of eggs now only costs 102. So while it's going up, we're at two percent inflation.

It's not back to the five dollars it was previous isolate. It might be up a lot, but that's okay. we have achieved our goal. Yeah, oops.

Now, until we see permanent job loss, it's likely that Americans are going to listen to this information and just say all right man. Look, we're just going to keep spending because we're pissed about what we went through with Coven. and that's exactly what American Express is revealing. American Express is revealing that Millennials and Gen Z's are continuing to drive spending growth.

They've increased their spending about 28 percent and when you compare that to Boomers who only increase, they're spending eight percent, you wonder why? Maybe because Boomers and Gen X own the majority of assets like most of the stocks that exist over 80 percent of them, Millennials only own about 2.3 percent of the stock market, and so the stock market downturn a more disproportionately really affected older individuals, and as a result, we see they're spending down, but younger folks are spending more, especially as their pay seems to be going up. In fact, there are people on Reddit threads companion and complaining about having to pay taxes for the first time instead of getting a tax refund because they made too much money last year. Business spending has also seen similar changes with small and mid-sized businesses experience a six percent increase in spending, while larger businesses have seen a 34 increase in spending. Now, what's fascinating is that 83 percent of small businesses are operated by people over 35 years old.

This aligns with the shrinking of older folks spending less money and small and mid-sized businesses spending less money because they're probably dominantly operated by people over 35 and younger individuals under 35 spending more money. So this makes me wonder if we're experiencing a change of the Guard Is the economy transitioning to one that rewards remote work, artificial intelligence, machine learning? Robotics and basically travel and entertainment things that younger people are much more inclined to support. Now, nobody can predict the future with certainty whether they have a crystal ball or they're a politician. As a licensed financial advisor, an ETF manager creator of wealth building courses all linked down below for Real Estate or stocks I may not have a crystal ball and I'm certainly not a politician, but I can offer you some practical advice.

The number one most important thing to consider to make sure you could build wealth during this period, and quite frankly, get rich is invest in assets. Forget about the ups and downs and the hoopla of this nonsense, because reality is nobody freaking knows. Hey, maybe I'll be right with my Nike Swoosh thesis and I'm putting my money where my mouth is. but I'm a big fan of diversify your portfolio.

Make sure that when you're investing in stocks, you're diversifying use actively managed ETFs that could do the diversifying for you if you prefer or passively manage ETF based or index-based ETFs like the NASDAQ If you're going to invest in the NASDAQ Technologies consider Qqqm. it's cheaper than QQQ and it's the same thing when it comes to real estate. Make sure that you get started by buying your first property. Get ready for those opportunities and the reality is, those opportunities might be here.

now. we're facing a very competitive environment with still very low inventory, but there are still great opportunities for you to get access to. When you go buy a home, get something that's a little bit of a fixer rubber, put some Sweat Equity in it, and see your net worth explode. When it comes to credit, make sure you're establishing it as best as possible, make an extra payment than you usually do every month.

Trick that algorithm to make it know that you care about your finances right now. Keep track of your expenses and cancel subscriptions you don't need. Hold off on buying a new car because you don't want to take on more debt during these uncertain times. Embrace Taller cost to averaging timing The market is really difficult.

and it's not just because you have to time the market once on getting out, but you have to time the market twice to get back in. So Timing is very difficult because you're really focused on two occasions that you have to time the market. It's not just a one time, it's a two-time that's very difficult and works in both directions. You can also build today, which generally I'm not the biggest fan of, but today it makes sense I have some kind of cash emergency fund because right now you're going to be getting paid four to five percent on your cash just sitting around whether it's in uh, money market funds Robin Hood wealth from or some of your banks that are offering 3D C or three month CDs Consider asking your bank what it offers, otherwise just do a Google search high yield savings account right now and you'll find plenty over four percent right now.

It's incredible. Also, do what you can to pay down that higher interest rate debt because that's going to be a burden when it's time for you to go buy real estate and that's really going to explode your net worth. Also, consider expanding your network. be aware of whom around you is actually focused on their finances, and when you're hanging around people who care about getting ahead in life, you tend to also care about getting ahead in life.

This is also a perfect opportunity to enhance your skill set. Whether you use online courses like those that I have or read some books that are a lot thus expensive, you could use something like short form to get inspiration via Super Powered Book summaries that is a sponsor on the channel. By the way, you can go to Shortform.com meet Kevin get 25 off or you find a different way like a mentor to help you learn how to build wealth. Either way, you want to do everything you can to stay focused in this time.

During these times, it's very easy to get pessimistic and that pessimism can really keep you down. It can make you feel like you're going one step forward and two steps for a back. and that's not what you want to feel like and I'll tell you everybody feels that way I Feel that way too. no matter how much it feels like you've got your act together.

Do what you can to stay informed, look for opportunity, communities, build your knowledge, and if you can even create multiple forms of income, Side hustles that end up giving you more skills are always worth it. Side hustle Driving a forklift probably not going to be super useful in the long term because it's not building you extra skills. Customer service serving people working with people might be really good because it can help you in the future. Uh, as a professional.

whether it's a realtor or CPA lender, who knows? Bottom line: Out of everything though, remain optimistic and that's going to help you build wealth because even though it's so easy to be jaded in the environment that we're in today because it feels like it's always the rich getting richer I Want you to think about this times are tough. but be thankful about these times because anytime I've experienced very difficult times before. whether it was losing my childhood home when I was a child well, childhood home or back when I was working at Jamba Juice and I was working overtime to upsell people food and drinks At a time where the market was so trash, people were telling me, why would you get into real estate? Get a real job Meanwhile, it took me 11 months to sell my first property and people were trying to demotivate me and discourage me. Good thing I stuck with it though because that really helped me build a career at the bottom of the market which ended up being one of the best times to learn because if you could make it at the bottom, you could make it to the top and enjoy the top and stay at the top because that's the goal.

One Foot In Front of the other, Stay optimistic. Thank you so much for watching. Consider subscribing sharing the video if you liked it. Leave a comment, let me know what you liked or what issues you're dealing with or what you'd like to see a video on next.

Thanks so much for watching! Good luck and we'll see in the next one. Foreign.