All recessions have things in common.


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Chapters

00:00 Start Here
01:13 A High Period
02:26 The End of Bad Times
03:56 Speculation
05:39 Irresponsible Lending From Banks
07:07 Irresponsible Spending By Individuals
08:35 Unforeseen Events
10:20 Lack of Preparation


The question on many people's minds right now is, "When is the next recessions." Nobody knows when the next recession will be, but we can look back on past recessions and see common themes of things that were happening beforehand. In this video, I share 7 things that will trigger the next great recession.

1. A High Period

When we look at a Great Depression in the 1930s, a huge factor that contributed to it was the period beforehand called the, "Roaring 20s." This was a time when the future looked bright as the war had ended, consumer spending was up, and consumer lending was up. Due to these things, however, many people created lifestyles they couldn't afford, were unable to repay loans, and the economic system collapsed. Recessions sometimes come after a high period because people are making bad financial decisions and aren't prepared for bad times.

2. The End of Bad Times

It is not only good times that can trigger a recession, but sometimes the end of bad times can trigger a recession. For example, war is often good for the economy, but bad for humanity. After WW2 ended, there was a recession due to less government spending, a shrinking GDP, and an over saturated job market. The war grew the economy, but the end of the war created economic problems.

3. Speculation

Oftentimes before a recession, there is a lot of speculation going on in the markets or guessing an outcome without clear evidence. An example of this was the 2002 Dot Com Bubble. As the internet was becoming more popular, many people were speculating that any company with .com on it would create a huge profit. The NASDAQ increased by 529% in a span of a few years; however, this was a market bubble that eventually burst creating a recession. As Warren Buffet once said, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.

4. Irresponsible Lending From Banks

When banks are left unchecked, they often chase greed and profit instead of common sense and the greater good. In the 2008 housing crisis, the recession was caused due to banks lending out home loans to anyone who asked; however, many people were unable to pay back their loans and we entered a recession.

5. Irresponsible Spending By Individuals

In addition to banks being irresponsible and approving loans to people who couldn't repay their loans, another cause of the 2008 recession was individuals being irresponsible by taking the loans. When people try to keep up with the Jones and live above their means, they end up taking on a bunch of debt, which eventually causes problems with the economy.

6. Unforeseen Events

Often financial crises happen when something nobody expected happens. For example, in 2020 we entered a short recession due to covid19 shutting down the world. Things happen every day that have never happened before and these unforeseen events can come with huge financial consequences.

7. Lack of Preparation

The biggest financial mistake a person can make is focusing on the things that are out of their control like recessions, market crashes, and world events; however, the best financial decision a person can make is focusing on the things they can control like budgeting, creating an emergency fund, and living below your means. When you focus on the things you can control, whenever a recession happens, it won't affect you as much.

**This video is intended for entertainment purposes only, none of it should be interpreted as financial advice. Links above are affiliate links where if you click and order, I will receive a commission at no cost to you. **