There are a number of signals one can point to that indicate a recession is likely. However, the key indicator, to me, that is of utmost importance to investors to truly understand how bad things might get, is the unemployment rate, particularly in the U.S. (as this is the world’s largest economy).
The global recession we’re all expecting isn’t technically official until Gross Domestic Product drops on a year-over-year basis over a few months. Therefore, we still have a ways to go until we know if we’re definitely headed for a recession. However, given the weekly Unemployment Insurance (UI) data that have come in from south of the border, it’s easy to see the path we’re on.
Millions of people in the U.S. are going unemployed every week, a potentially disastrous trend for these folks in a pandemic.
Approximately 60% of the American public hold health insurance through their companies and may be forced into bankruptcy should they lose their job and get sick, simultaneously. This is a real risk for millions of Americans.
The true impact of a health crisis like this is unknown and must be taken very seriously by all at this stage. We really have no idea how bad things could get from a downward spiral perspective. My view right now is that staying mostly in cash, with some gold and highly defensive holdings is the only place to be, at this time in history.
Invest wisely my friends.
