Predicting The Future


One of the questions increasingly being asked these days has to do with the timing of the next recession. There are those who see the current economic climate remaining in place for years and those who see a recession in our near future. On what does the second group base their opinion?

The very slow to flat growth in U.S. Gross Domestic Product (GDP), a measure of the output of all goods and services produced in this country annually. A healthy growth rate is in the 4 to 5 percent range; a modest growth rate is 2 to 3 percent. Our current growth rate may slip toward 1pecent this year. A recession is defined as two consecutive quarters of negative GDP growth – we are closer to that now.

The declining jobs growth as reported in recent monthly jobs numbers coupled with an increase in weekly unemployment claims. Many see this trend as an early predictor of a recession, as fewer people working results in reduced consumption, which in turn causes a recession.

Decreasing to non-existent corporate profitability. The earnings reports on corporate profitability for the first quarter of this year were largely underwhelming, with many corporations reporting lower profitability than was predicted despite fairly modest predictions. This trend suggests that a recession may already exist in the manufacturing sector and could easily spread to other sectors.

Those who disagree with this assessment suggest that the election of a new president, with the expectation of policy changes, economic stimulus and a possible reduction in taxes will get the economy moving and keep us out of a recession. While that argument holds promise, we’ll all have to wait unit November to see the outcome of the race for the White House. More government spending, which will cause the already voluminous national debt to balloon even further, will not be a great move for the economy as a whole.

I cannot predict the future any more accurately than anyone else, but if historical trends mean anything, we are closer to a recession than some will admit and just a few negative surprises away from a market correction.

That being said, ask yourself if it is indeed time to review your investment strategy and position yourself to withstand the next downturn so your future plans are not jeopardized.

Frederic “Ric” Schilling is a Florida native, born in Jacksonville, Fl. Ric is President of Senior Guardians of America, a local North Florida firm specializing in tax reduction, long term illness planning, asset protection, probate avoidance and life income planning. Ric is a National Speaker and Advocate on Senior Issues and has been featured by the Florida Times Union and WJXT, TV-4 in Jacksonville as an authority on Estate Planning and Retirement Issues. Senior Guardians has an A+ rating with the Better Business Bureau and is a member in excellent standing with the National Ethics Association. Contact Frederic: 904-371-3302 or 888-891-3381 Please visit: www.seniorguardian.comThis article is not intended to give tax or legal advice. Securities offered through Center Street Securities, Inc. (CSS), a registered Broker-Dealer and Member of FINRA & SIPC. Senior Guardians is independent of CSS.