2020 RECESSION: Could This Cause The Next Market Crash? #Best Education Page #Online Earning

- How's it going today guys?

Welcome back to the channel.

Hope you're having a great day so far.

So in this video today,

we're gonna be talking about the 2020 Recession,

or a 2020 recession.

Is it possible that we will see a stock market crash

or a recession in 2020?

I'm gonna give you guys my opinion

on why I think we could possibly see

a recession coming in 2020,

and because of one specific catalyst.

Now before we get into that video,

I just wanted to mention something I've been working on

for the past co
uple of months.

Very excited to announce it.

I've put together a completely free

stock market investing course,

specifically geared towards beginners.

And this is not a course

that's gonna be an upsell to a paid course.

It is literally a 100% free course on investing,

close to four hours long.

And that is now available.

It's the top link in the description below.

Or, to make it easy, it is freeinvestmentcourse.com.

Would highly recommend taking that course

if you guys are beginners,

or maybe intermediate in the stock market,

and you're looking to learn the basics.

It is a 100% free resource that I wanted to provide you guys

as a way to give back and thank you

for your continued support here on YouTube.

But that being said, before I give you guys my theory

about whether or not we're gonna see a recession

and what might cause it,

I kinda wanna circle back and talk about,

well, what exactly is a recession anyway,

and what are the primary economic factors

that result in a recession?

So by definition, a recession is a period

of economic decline that lasts six months or more.

Now we've seen a lot of recessions take place,

and obviously the last one

was the second most severe recession or crash in history.

So I think for that reason alone,

a lot of people are nervous

about a potential upcoming recession.

But if you look at the history of the stock market

and the overall economy,

you do have recessions on a typical basis.

And a lot of people are sitting here saying,

"Hey, you know what?

"We're going into 11 or 12 years on this bull market.

"Aren't we due for a recession?"

But there are primarily four big economic factors

that people look at.

And we're actually gonna jump into my computer soon,

and I'm gonna show you guys what these numbers are.

And these are the key numbers that economists look at

when determining the overall health of the economy,

and the likelihood of an upcoming recession, okay?

So the first thing that they look at

is manufacturing numbers.

How much goods and products are actually being manufactured?

That's a general idea of, back-orders,

and orders from customers,

and how much we are actually producing as a country,

or globally, they'll look at these numbers.

The second thing that they look at

is the average household income.

And as I'm sure you guys can imagine,

in a prosperous economy,

we wanna see all of these numbers going up.

We wanna see increases in manufacturing,

and increases in the backlog.

We wanna see household income on the rise.

The third thing that they look at,

I'm sure you guys have heard of this one before,

is the unemployment rate,

which shows us how many of the people

that can legally and physically be employed, are working,

and what percentage are unable to find jobs.

And the final thing that they look at is retail sales.

How much money are people actually spending,

versus what they're making.

So we wanna see all of these numbers going up.

That would be a sign of a prosperous or bullish economy.

Now all these numbers collectively,

make up something called GDP, or gross domestic product.

And I know that sounds confusing, but it's really not.

What GDP is, is the measurement

of the overall economic output of a specific country.

So if you took all of the production of the goods,

as well as the services of a given economy,

and put a value on it, that would give you GDP.

It's a combination of all of the manufacturing output,

and the household income, and retail sales.

All of these numbers together paint this picture

that we have here, known as GDP.

So these are the primary five things

or indicators that people look at.

And when you start to see unemployment on the rise,

or retail sales declining,

or household incomes stagnating or declining,

or manufacturing numbers declining,

or the backlog beginning to decline,

that would be a sign of a potential economic contraction.

So using these numbers right here,

let's talk about what actually causes a recession

in the first place.

So, they actually, all of these things

tend to happen at the same time.

So it's not really a sequential order here.

But, just for the sake of explanation, we're gonna start off

with talking about company profits, okay?

The profitability of a given company.

Let's say the very first thing that happens

in this domino effect here,

is that company profits begin to decline.

So the company goes from making, let's say a lot of money,

to, "Okay, we're making less money now

"than we were last quarter, or last year."

And so that could be a result of a decrease in the backlog,

or less retail sales,

due to lower household income.

So all of these things work together.

But let's say we start off here

with a company sales or profits declining.

So what are they gonna have to do as a result?

Well, one of the things they're gonna have to do

is look at that workforce,

and they're gonna have to say,

"Can we afford to have all of these employees?"

And if they in fact cannot, what you may begin to see

is company layoffs taking place.

Now all of a sudden, you've got people getting laid off.

Unemployment is on the rise.

Well guess what?

They're not gonna be spending as much money on dining,

or retail sales in general.

So once you start to see unemployment begin to climb,

you're also going to see retail sales declining as well,

as people are becoming more conservative.

And then as retail sales are declining,

less people are buying physical products,

well guess what that does to manufacturing?

All of a sudden the backlog begins to shrink,

and there's less demand for products.

So you're beginning to see how all of this

begins to circle together here.

And when you have unemployment on the rise,

and a good portion of the population is unemployed,

well, what do you think happens to household income?

And the other thing to consider here

is that if company profits are declining,

well they're not gonna be handing out raises

and bonuses left and right.

That's going to decrease household income,

which could in turn, lower retail spending,

which is gonna have an effect on manufacturing.

So all of this comes together

into this picture here known as GDP.

And then another factor

that plays into this unemployment figure here

is that there are students graduating every single year,

looking to enter the workforce.

Now in a prosperous economy, those jobs are easily absorbed,

and the unemployment figure stays the same.

Because there are some people retiring from the workforce,

but there's also new people entering the workforce.

And in an ideal world,

there are jobs for all of these people.

But when company profits are declining,

and they are laying people off,

well, they're certainly not hiring people.

And so that can be another issue here

for this unemployment number,

is qualified individuals getting out of college,

but having no ability to find sound employment.

And this is because we are in a recession,

these people coming out of school aren't able to get jobs.

So, this video actually is based on a video

from WhiteBoard Finance, Marko.

He did a video on the 2020 Recession.

Marko in his video talked about

how he graduated right around 2008 with a finance degree,

and he didn't get a job in finance.

He started selling used cars,

and he told me he was bartending,

and he was just hustling to make a couple of bucks.

So that was a perfect example here

of just getting out of school at the wrong time,

and being a student, with student loan debt,

that you can't really start paying down,

'cause you can't find sound employment.

So all of these things combine together,

and this is what ultimately paints the picture

for what a recession looks like.

So the question you're probably asking yourself right now

is, what are the manufacturing numbers looking like?

What is household income like right now?

What are retail sales, what's unemployment?

So, what we're gonna do now is jump into my computer,

and I'm gonna show you guys what these numbers look like

at this current point in time.

All right, so the first thing

we're gonna take a look at here is the unemployment figures.

And we're actually at a period of time

where we're seeing historically low unemployment.

Now, I assume this goes without saying,

but, just in case, obviously, low unemployment is good,

and higher unemployment would be a bad thing.

So this article right here comes from NPR.

I'm gonna link up to all of this stuff

down in the description below.

But the Labor Department releases jobs reports

every single month.

And for August, US employers added 130,000 jobs,

which doesn't really matter, as far as that number goes,

unless you study these reports and you know.

I guess they were saying, okay, forecast was about 158,000,

so it was a little bit shy of what was expected.

But unemployment stayed steady at 3.7%.

So if we look here historically at unemployment,

you can see where the unemployment raises

during a recession.

This is layoffs here.

And this was the recession of 2008 to 2009.

This was when jobs were being lost,

and there was jobs being lost month after month.

And then we see, okay, jobs beginning to come back

at a steady rate.

And if we look here at the overall unemployment rate,

as you can see here, it was around four, 4 1/2%

before the recession.

It went as high as 10%.

And for the last 10 years or so,

it's been on a decline here.

Maybe leveling out here, averaging around 3.7%.

So, unemployment numbers,

nothing here is indicating a recession,

based on overall unemployment.

Now you may be seeing some layoffs in particular industries,

like the automotive industries,

but if you look at the overall picture here of unemployment,

there are no real red flags here, in my opinion.

Okay, so the second thing we're gonna look at here

is consumer spending,

which gives us a good idea of the retail sales.

And in the second quarter of 2019,

consumer spending hit an all-time high.

So consumer spending is on the rise.

However, looking at this article here from The Balance,

the increase in consumer spending was just up 0.9%.

So it wasn't stellar growth here.

As it says here, they look for two to 3% growth

being a healthy range,

in terms of GDP and consumer spending.

But because of changes in retail sales

and consumer shopping habits,

these numbers may be skewed a little bit

with the whole Amazon effect,

and just overall the millennials being less of consumers.

Not like the baby boomers were, for example.

But if that's concerning to you,

that is your opinion to feel that way.

But, yeah, increase of 0.9% shows

that the growth in consumer spending that we are seeing

is definitely beginning to taper off.

Okay, so this one right here shows us

real median household income in the United States.

And as you can see here guys,

this shaded area indicates recession periods.

So we saw a decline here in the '90s,

we saw a decline around the dot-com bubble,

a big decline in 2008, and then we saw a quick return here,

in terms of real household income.

It went up pretty quick, but as you can see,

it is beginning to taper off here,

where we're not seeing that same type of growth.

So I think in the coming years, 2019, 2020,

we'll probably see close to stagnant household income,

if not maybe a slight increase.

But certainly not the growth of household income

we saw from 2012 to 2016.

So then we have a look here at manufacturing numbers.

This article here is from MarketWatch.

And there is a big research company called ISM.

They released a report

that overall shows you more numbers than anybody

could ever really understand about manufacturing.

But the ISM is pretty much the industry standard

for getting a look at manufacturing.

And essentially, what this showed us was that the ISM,

the Institute for Supply Management's manufacturing index

fell to 49.1% in August, from 51.2% in July.

Now I'm gonna be completely honest with you guys.

I don't know what this percentage represents,

but this is what's important to understand right here.

"Any reading below 50% indicates a contraction in activity."

So you'd wanna see this number above 50%,

meaning that activity is expanding.

But what we saw is a slight contraction

in manufacturing activity for the month of August.

And this is the lowest reading in manufacturing numbers

since January of 2016.

So we are definitely seeing

a bit of a lull here in manufacturing.

But again, not a crazy low number.

And if we take a look here at this index,

50 would be your middle ground.

You wanna be maintaining above 50,

showing you expansion in manufacturing activity.

And this is around the point where we are at right now,

is where we were in 2016.

So we are coming off a bit of a period of expansion

in manufacturing activity.

And we may be seeing a bit of a retraction

in the next coming months, in manufacturing.

And then finally we have everything coming together here

in real GDP, or gross domestic product.

And, as you can see here guys, real GDP is still growing

at a steady and average rate here.

This again marks recession periods.

Let me get into a slightly tighter view here.

Maybe that'll give us some more,

a better idea of what this data is showing us.

So looking at the last 20 years of data here,

you can see how in 2008 we had a retraction in GDP

because of that recession.

But overall, GDP is still moving right along

at a decent rate.

So, no indicator here being shown by GDP.

But again, this is kind of a blend of everything,

showing us the overall economic output of a given country.

So this would be probably the last place.

You'd see indicators other places

before you saw the dip in real GDP.

So overall, looking at these numbers,

what we can gather here

is that unemployment is still at record lows,

but we're kind of seeing

steady unemployment now, around 3.7%.

Consumer spending is still increasing,

but we saw just 0.9% growth, quarter over quarter.

So, it is beginning to taper off,

but again, that may be a result

of consumer spending changing,

and different consumer shopping habits.

As far as manufacturing goes,

we are seeing a slight retraction in manufacturing numbers,

and we are at a lull

that we haven't seen since January of 2016.

But, again, that is not a huge red flag,

sky-is-falling type retraction.

And then finally, household income is still on the rise,

but that is definitely tapering off.

So, all in all, no major red flags

are being seen here with these numbers.

Maybe people are getting a little bit nervous

about manufacturing and consumer spending being an indicator

of what may be happening in the future.

If I were to take any guess, I would say that

we're gonna see a period of maybe economic slow-down

in the coming years.

But based on these numbers, solely looking at the data,

there are no major red flags about an upcoming recession.

All right, so now that you guys have a picture here

of what these numbers are looking like,

in my opinion, based on these numbers,

nothing is jumping out to me saying,

"Oh, a recession is on the horizon."

However, there is one major catalyst that could be something

that could definitely cause a recession, in my opinion.

Now before I reveal what that is guys,

I just wanna throw this out there.

This is literally just my opinion, okay?

And you can get opinions just like this

all over the internet.

They're a dime a dozen.

If you like my opinion, and you agree with it, cool.

If you disagree with it,

I'd love to hear your feedback in the comments.

But the main thing I'm getting at here guys

is don't take any one person's opinion

about whether there's gonna be a recession

or a market crash, and then make decisions on it.

At the end of this video, we're gonna talk about

what to actually do during a recession.

But, look at this as strictly entertainment value here,

and just my opinion.

We're gonna talk politics here guys.

I'm not a very political person.

I'm kind of in the middle of like,

I don't really care about politics,

so I'm not on one side or the other here,

but I do believe a 2020 recession would be possible,

based on the outcome of the 2020 election.

So, very recently, Trump was at a rally

where he was talking about how whether or not,

and I'll link to this in the description,

he was talking about how whether or not you like Trump,

you have to vote for him,

otherwise the stock market is going to crash.

And so he kind of painted this picture for his supporters,

or even people who are neutral,

that if they don't vote for Trump, and he's not reelected,

well then there's going to be a market crash.

Now Trump got into the presidency here

at a very convenient time.

And while he did have some effect

on this bull market we've been experiencing,

a lot of it had to do with the fact that

we had such a bad recession in 2008,

that this was just naturally going to be

a much longer bull market.

But, you know what it is

when you're in the right place at the right time.

You're gonna take credit for it anyway.

And the average person

who goes out and votes for the presidential election,

well they don't understand economics at this level,

and they truly believe that Donald Trump is the reason

why we are experiencing this bull market.

It has nothing to do with anything else out there,

other than the fact that Trump was elected,

and he basically somehow pulled this bull market

out of his you know what.

That is the general perception

of the average person out there.

So here's where this could run into trouble here.

I believe if we see Trump reelected,

we are going to see this bull market continuing.

Unless there's some major other catalyst,

and there are, there are definitely some potential things

that can be thrown into this mix,

like a trade war with China, or anything like that,

that could potentially trigger a sell-off.

But in my opinion, if we do in fact see Trump reelected,

I see this bull market continuing.

However, if we don't see Trump reelected,

I think that alone could be enough to trigger a correction,

if not a recession to take place.

Because the average person thinks that Trump started

and created this bull market.

And they are under this perception

that he's putting out there that if they don't vote for him,

the stock market will crash.

And if enough people believe that,

that Trump is the reason for this bull market,

and if he ends up not being elected,

well then they're gonna manufacture a crash,

just based out of their own panic selling.

All you need to take place for a crash

is people selling off in a massive way.

And if we see Trump not elected,

there could be enough people getting out there

and selling the whole house and getting rid of everything

to actually cause a recession, just solely based on the fact

that Trump has told everyone

that he has created this bull market,

and takes responsibility for it.

Now in my opinion,

I think this is how things are gonna play out.

And maybe we'll check back at this video,

maybe I'll look like a genius, maybe you'll laugh at me.

Either way, it is what it is.

But here's what I think is going to happen.

I think what we're gonna see happen

is just before the election,

Trump is going to complete a trade agreement with China,

and the whole trade war fears

will be totally blown over at that point,

which is obviously going to result

in a positive move in the market.

I very much believe that Trump has a way

of releasing news at a good time.

He thinks about things,

he's a very smart guy, I'll say that.

He thinks about things in a way,

and he's gonna time this news

about coming up with a trade agreement with China,

and that's gonna be a big win for him

going into the election.

And if that is to happen,

if he does have a trade agreement with China,

I see him overwhelmingly getting reelected as president.

And, that being said, if those two things go into place,

I see this bull market continuing.

Again, based on the fact

that there's nothing else really here signaling,

red flag, panic, time for a recession.

So that being said guys,

that's my opinion on the 2020 Recession.

I would love to hear what you guys think

in the comments section below.

Do you agree with this opinion?

Do you think I'm out of my mind?

I would love to hear what you guys think.

But now what I wanna address here is

what do you actually do with this information?

Assuming you think, "Okay,

"I agree with what Ryan's saying here.

"There's gonna be a recession

"around the time of the election.

"What should I do?"

Number one, the first thing

you should probably do is nothing.

Maybe go for a walk, take your girlfriend out to dinner,

like literally just do nothing.

Because if you look at the history

of the economy and the stock market,

recessions are a very normal thing.

And I'm not gonna get into that in this video,

but, a recession is a normal part of an economic cycle.

And unless you're very heavily exposed, or leveraged,

which most of you guys watching this video,

I would hope you aren't,

then you ultimately have nothing to worry about.

In terms of the investing strategy,

one of the best ones to deploy

is simply dollar cost averaging,

which is where you're buying shares

at a lower and lower price

to ultimately get the average cost basis of the market.

And that would just look something like this.

Let's say the market is going down,

and you're buying as it goes down,

and then as it goes back up,

let's say you're buying at set intervals,

and you buy some here, you buy some here, you buy some here.

Then you buy a little bit more here,

buy a little bit more here, buy a little bit more here.

What happens by doing that, by dollar cost averaging,

you end up paying the market average here

for your cost basis.

Dollar cost averaging

is one of the best strategies out there, in any market.

But it especially works well in a bear market,

when you're able to buy as things are going down,

and then maybe you buy more as it goes up,

and you're paying that market average.

So dollar cost averaging, another winning strategy.

In terms of debt, you should be probably cutting down

on any consumer debt right now.

I personally wouldn't be taking out personal loans

or getting an auto loan right now.

And again, that's because if you are an employee,

and you do believe that there may be a recession,

well then you do have to think about unemployment here,

and whether or not you would be unemployed.

Or household income.

Let's say you're solely right now relying

on your bonus income or raises

for whatever lifestyle you have right now,

there is a potential, if there is a recession,

that there's not gonna be many raises handed out

when company profits are declining.

The other thing I would say

is if you're brand new to the market,

and you don't have any money in the market right now,

well at this point in time,

I don't think it's a good time to be investing

in unprofitable companies or pure speculations,

again, based on this level of uncertainty

with this 2020 election.

That's just my opinion.

I personally wouldn't be speculating

in the market right now.

And the last thing I'd recommend doing is,

maybe you go out there and you get a side hustle.

That way you're kind of independent

of the household income and the unemployment here,

because if you have your own side hustle,

and you're making your own money on the side,

you're not as affected if,

okay maybe you're not getting that bonus or that raise,

or maybe you get laid off,

but you've got this side hustle going,

and you're able to support yourself,

and maybe even make a full-time income from it.

So, I would definitely diversify,

in terms of your income, no matter what.

I don't care if it's a bull market, bear market,

everybody should be diversified in terms of their income.

But yeah, I would cut down on your consumer spending,

I would build up that emergency fund, just in case.

But in terms of the stock market, I would say do nothing.

Don't speculate, don't get involved with leverage,

and dollar cost average,

and take advantage of deals that you see value in

if we do see a recession.

But anyways guys, that's gonna wrap up this video.

I hope you enjoyed it.

Like I said, if you wanna grab that free

four hour investing course,

it's the top link in the description below.

Or it's freeinvestmentcourse.com.

My gift to you for supporting me,

and I really wanted a quality

stock market educational course

available for everyone for free.

So that is why I put that together.

But thanks so much for watching.

I hope you enjoyed this video.

Subscribe if you are new,

and I will see you in the next one.

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