The real estate market is up for the first time in years and banks are becoming more willing to lend money. However, this may not be the case for long. Stocks have fallen about 10 percent, leaving them just 10 percent shy of the mark that defines a recession. There have also been several warning signs to indicate that we might be experiencing a peak before another recession.
In fact, according to a prediction using the same model that successfully predicted the 1987 crash, another recession was supposed to hit at the beginning of October. That time has come and gone, but doesn’t mean we’re out of the red just yet. The date may have been wrong, but the data doesn’t lie – and all signs say that a recession is imminent.
Evidence of an Upcoming Recession
Financial analysts have been watching the market for some time, and they’ve discovered several indications that the economy is about to decline. Some even believe that we are in the beginning stages of a crash already. Here is some of the most prominent evidence they’ve discovered:
Unsustainable Debt: When the economy began to decline in 2007, the debt began to rise. Since that time, the world has accrued $57 trillion in debt, which beats GDP considerably. In other words, over the last eight years, we’ve developed debt a lot faster than we’ve managed to make enough GDP to balance things out.
The heart of the debt comes from a few different things. First, several countries, primarily China and Brazil, have borrowed so quickly that the risk of financial crisis is in the red. When that happens, we can expect a crash to happen within 3 years. The debt crisis could also be the result of banks offering easy loans and miniscule interest rates shortly after the 2008 recession, in an attempt to stay in business when people were scared to borrow.
Prices of Commodities Crashing: Those who are filling up their vehicles for $2 a gallon or less have no doubt noticed the falling price of oil. It’s great for consumers, but the oil rig count is declining, and oil businesses are shutting down rapidly. At the beginning of 2014, one barrel of oil was $110. Now, the same barrel goes for just $49. The same can be said for copper, which cost $4.50 a pound in 2011, and is only $2.25 now.
Global trade is struggling as well. Volumes of world trade have contracted since the end of last year, and businesses are bending over backwards to trade around the world at a reasonable rate.
China Is Falling: Perhaps one of the scariest signs of an impending recession is China’s slowing economy. They were integral in helping the world recover from the last recession, but their economy is now being weighed down by the massive amounts of debt they’ve accrued.
As debt becomes too much, production growth becomes weak and financial risk becomes threatening. This is what’s happening with China’s economy – and since it’s one of the largest economies in the world, it will no doubt have a substantial impact on the global economy. If they continue in this manner, other countries will need to help bring them out of a recession.
History Says a Recession Is Imminent
If we pay attention to historical economic patterns, we see that a recession is imminent. The average time for a recession says that we’re due for one in 2016, and many signs are pointing in that direction. There’s nothing to say that this market decline will be as drastic as the 2008 crash, but things point to something big happening soon.
The saying “hindsight is 20/20” has never been more true than when it comes to economic factors. The housing bubble was doing so well in the mid 2000’s that it was hard to predict at the time that a downturn was ahead. But looking back, all of the signs were there.
Financial experts are saying we’re in the same position now. It would be wise to take a closer look at the market and prepare for another economic decline in the future, just in case.