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What You Need to Know About the 2019 Recession

Is a Recession Coming?

While retail sales and production are up, and unemployment rates are down it may be hard to imagine that the U.S. economy could be on the brink of a recession. However, it is a fact that such levels often peak just before falling just a few months later. Economic forecasters are typically blindsided by recessions because of economy’s ability to change so swiftly.


One indicator of an upcoming recession is the ratio between household wealth and income. In the latest release from the Federal Reserve shows it to be at record levels, just like it was before the last two recessions.


Stock market performance has also been a strong indicator of upcoming recessions. Historically the stock market will peak approximately seven to eight months before an economic downturn. The Dow Jones hit its highest closing record for the 15th time in 2018 on October 3. What followed was the worst December since the great depression.


Another prelude to major recessions that you wouldn’t expect seems to be an initial low unemployment rate. This low level is indicative of a strong job market which is the end of an economic cycle. Unemployment rates below 4 percent have often immediately preceded recessions; recently the rates dropped to 3.7 percent.


While recessions are hard to pin down and no one think can indicate when one will happen, there are several signs pointing to one in the near future.


What does it mean for you?

The biggest impact on individuals during a recession is unemployment. During the recession of 2007-2009, the unemployment rate peaked at 10%. Especially notable about the unemployment rate during that recession is that it included a higher proportion of long term unemployment than previous recessions.


The second biggest factor is spending. Even those individuals who are able to keep their jobs are less likely to spend on big-ticket items, be it TVs, cars, and services, including dining out as a general feeling of uneasiness accompanies downturns in the economy.


It seems that the best insurance policy you can have for a recession is education. Regardless of industry one of the biggest factors determining unemployment was education attainment. Those with less than a high school diploma were most affected while those with a bachelor’s degree or higher were buffered from much of the recession’s unemployment impact. Even individuals with an associate degree or some college education fared better than those with no high school diploma or no college.


The chart below shows that even during times of economic recovery that the unemployment rates are always higher for those with the least amount of education and lower for those with a college degree.


Industry Impact

The industry in which you work is a major indicator of how a recession will affect you. Generally speaking, construction, manufacturing, and retail experience the largest declines; as well as travel accommodations and services. Though some industries suffer, the same isn’t true across the board.  Education and Health services both saw an increase in employment during the recent recession, and it has been increasing for more than 30 years.


Here are some careers that are expecting growth in the upcoming years, irrespective of a recession or not.


Education- An ever-expanding population guarantees growth in the education sector, both in primary and secondary education.


Healthcare- Even when times are tough people need healthcare. Not only are older people living longer, often with chronic illnesses, but major overhauls to the insurance industry will address issues of cost, coverage, and quality of healthcare services. This doesn’t just mean doctors; nurses, administrative staff, medical billing and coding, physical and occupational therapists, dental hygienists and all other health-related professions are expected to continue to grow.


Finance– Recessions trigger a movement of money. Acquisition and liquidation of assets, retirement planners, investment bankers, auditors, financial advisors, and accountants will all be sought after to steady the boat.


Law Enforcement- As reasoning would have it, crime does not decrease in a recession. Communities will be in need of police officers, probation officers, court reporters, paralegals, and attorneys.


Technology- Computers are a safe bet as technology isn’t going anywhere. With nearly every field becoming more technological the field continues to grow.  Web developers, software programmers, network systems analysts, and computer repairmen are all stable careers for those worried about a recession.


Aside from these specific industries, think about basic human needs. During bad financial times, we will still need funeral directors, clean water, and safe roads. Although the face of agriculture is changing, we will still need food. People will still be caring for their pets, so veterinarians will be in demand. Any job that provides an essential service will be about as recession-proof as you can get.

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