Some analysts in recent months have suggested that the U.S. could be headed for another recession.
The ongoing U.S./China trade war, fading effects from tax cuts and government spending and an aging expansion are just a few of the reasons cited. Other analysts have suggested that recent economic weakness and market declines are normal and simply some bumps in the road. Whether the next recession hits this year, next or in the next few years, it will arrive.
Here are three simple reasons that a recession is unavoidable:
- The Fed relies on past data: Contrary to popular belief, the Fed does not have access to real-time data on such key metrics as job growth, inflation, GDP growth, consumer spending, trade figures and more. Quarterly GDP, for example, goes through a process of an initial estimate, a second revision and then a final figure-a process that takes nearly three months to complete. The Fed is forced, therefore, to base decisions on what could be stale data.
- Emotions: Make no mistake, members of the Fed’s policy-setting committee are experts and are extremely astute in financial matters. They are, however, human and can and do make mistakes. Fed members can become entrenched in their assessments of economic conditions and may not be as flexible at times as perhaps they should be. Not only that, but economic conditions do not always behave the way they should according to the textbooks.
- Fiscal policy: The Fed has no control over fiscal policy, or how the government collects and spends tax revenues to influence the economy. Although the Fed may take such factors into account, doing so can be challenging as fiscal policy can take years to work its way through the economy. This can make it difficult, if not impossible, for the central bank to incorporate those effects in its models.
Forget for a moment all of the other potential issues that can fuel a recession and you are left with a situation that warrants a periodic recession on its own. Given the current economic and geopolitical landscape, however, another recession could come sooner than anticipated. Not only that, but the Fed may lack the necessary tools to effectively fight it.
Now may be the ideal time to start gearing up for the next major economic recession.
One important way to prepare a portfolio is to diversify with alternative asset classes. When it comes to asset classes that may potentially outperform, there may be no better choice than physical gold.
Adding gold to your portfolio has never been easier and perhaps never more important. Simply pick up the phone and speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the key role this asset class may play. Our associates are here to answer any questions you may have and can even show you how to incorporate this asset class using an IRA account.
Don’t wait for the next major recession to hit, taking the economy down and stocks along with it. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, central bank, economic weakness, fiscal policy, inevitable recession, major economic recession, market declines, next recession, Past data, physical gold, the fed