A Recession is Still Coming
Catchy headline, eh? I'm not trying to create clickbait or lead with fear. In fact, by the time you're done reading this, I hope you feel the opposite of fear. Immediately following President Trump's re-election, the equity markets soared on optimism, with the S&P 500 increasing 2.5% yesterday alone. The general public sentiment is that we're now positioned for good economic times. While we might see a momentary jolt of positivity, I can confidently predict a recession is still coming (regardless of who is in the White House). Why? Because that's what always happens. Again, I'm not trying to spark fear, so please bear with me.
I'm not arrogant or ridiculous enough to proclaim when said recession is coming, but I promise you it is. Again, why? Because that's what happens in a capitalist society. We grow, contract, grow, and contract again. It's been that way for centuries. In other words, recessions (and the stock market crashes normally associated with them) are a normal part of a well-functioning society.
Perhaps some context is in order. In the last 100 years (1925-2024), there have been 16 recessions, beginning in:
1926
1929
1937
1945
1949
1953
1958
1960
1969
1973
1980
1981
1990
2001
2007
2020
16 recessions in 100 years translate into one recession every six years. The longest span between recessions was 13 years, between the 2007 and 2020 recessions. However, the 2020 recession was a blip on the radar, lasting only two quarters (just long enough to be technically classified as a recession). Then, due to stimulus and other factors, the economy shot back up as quickly as it fell. If we remove 2020 as an actual recession, it means we're actually 17 years (and counting) between meaningful recessions.....on borrowed time compared to our every-six-year historical rhythm.
Can we all agree a lot of life has happened in the last 100 years? World War 2, Vietnam, Korea, two Gulf Wars, the assassination of a president, 9/11, countless natural disasters, civil rights battles, COVID, political unrest, and a ton of other events I'm probably blanking from my memory. Through all that turmoil, intertwined with the 16 recessions I mentioned earlier, the U.S. stock market is up 10.4% per year over the last 100 years. A $1 investment 100 years ago is now worth $19,800. The stock market has gone up nearly 20,000x, not in the absence of terrible things, but through all the terrible.
I have two takeaways today:
A recession WILL happen. A stock market crash WILL happen. It's inevitable. Expect it. Anticipate it. Don't be surprised or shell-shocked when it arrives.
Don't fear it. Know it's going to be ok. Know that your patience, diligence, and fortitude will be rewarded. Don't lose sleep at night. Don't let it rob you of your peace.
Please don't scare yourself into making rash decisions or becoming reactionary. Stay the course. Be intentional. Get your financial house in order. Live with meaning. Practice generosity. Make an impact. Please don't let fear or uncertainty rob you of a better future.....or a better present.
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Yesterday's Meaning Over Money podcast episode also engaged in this topic. If there's someone in your life who is more apt to listen to a podcast than read a blog, could you please share it with them?
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