Who’s Predicting Another Recession? Almost Everyone

A group of economists from Citigroup recently analyzed the state of the global markets – and their outlook was not good. To quote them, “We believe that we are currently in a highly precarious environment for global growth and asset markets after 2-3 years of relative calm.” To put it bluntly, another recession is coming – and soon.
What’s causing their dismal outlook? Among other factors, the analysts point to the fragile economy in China, excessive leverage across many countries and sectors, and geopolitical risks stemming from global instability in places like Russia, Turkey, Syria, and North Korea.
Largely, the issue is a crisis of confidence. As a result of recent history, combined with the current political climate, economists no longer believe the United States is capable of propping up the global economy (or even its own) when times get tough. In their own words, “a material slowdown in the US, even short of a recession, would still be a major headwind for the world economy.” In their view, even a slight hiccup or misstep in the American economy could have huge repercussions, leading to a “butterfly effect” that impacts the rest of the globe.
It’s important to note that Citigroup’s definition of “recession” doesn’t exactly line up with the one you’d find in the dictionary. They define a recession as being less than 2% global GDP growth. This is still a net positive, but is far below normal expectations – even with all of China’s current economic woes, they’re still on track to grow more than 6% this year.
However, the Citigroup economists aren’t alone in their pessimism. An analysis from JPMorgan Chase combed through 115 years of records and found that when corporate profits turn negative for consecutive quarters, a recession follows 81% of the time. Even worse, the remaining 19% of the time only avoided recession through a stimulus – an unlikely event, to say the least, given the current dysfunction in Washington.
Unsurprisingly, Fed officials are trying to downplay talks of a recession. However, their forecasts should always be taken with a grain of salt – in early 2008, in the midst of the market crashes that caused the Great Recession, a survey was taken of forecasters at the Philadelphia branch of the Federal Reserve – and none of them predicted negative growth for the United States that year.
The bottom line: if you’re worried about your money, exchanging some of your risky paper assets for a gold or silver IRA can be an effective hedge against instability. Fortress Gold Group has earned an “Excellent” rating from TrustPilot for its commitment to customer service and compliance. If you’re looking to start a precious metals IRA and diversify your investments, reach out to us today!

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