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The Beverly Hillbillies Recession Prediction – A Recession Is Coming For Sure!

The Beverly Hillbillies Recession PredictionCURING THE COMMON COLD

When I was a kid I loved a TV show called The Beverly Hillbillies. It was about a family of hillbillies who struck oil, got rich and moved to Beverly Hills.

The family matriarch was Granny and she had a cure for the common cold that made the family’s banker (the greedy Mr. Drysdale) very excited b/c he thought he’d get rich selling it.

But the cure worked like this – cold sufferers drank her awful tasting medicine, and then got plenty of rest and lots of fluids, and in a week to ten days their colds got better – every time.

In other words, correlation was not causation.

I think of that story every time I read about recession predictions, as they have been surfacing everywhere lately.

RECESSION INDICATORS

According to this WSJ article, there are numerous indicators of a pending recession including:

  • Stock market sell-offs
  • An Inverted Yield Curve (short-term rates are higher than long-term rates)
  • Increasing Corporate Bond Yields
  • Negative Consumer Sentiment
  • Negative Business Sentiment
  • Increasing Initial Jobless Claims
  • Declining Industrial Production
  • Declining Aggregate Work Hours
  • Declining Retail Sales
  • Economist Surveys

So, is a recession coming?  Most likely not – in the near term at least.

Economist surveys came up with only a 22% chance of a recession in the next 12 months.  In addition, the article points out that we only need to worry when we see multiple indicators pointing to a recession, as opposed to just one or two.  This week, recession fears were allayed by strong retail sales figures and rising oil prices, and the Dow had a record day as a result.

Back to The Beverly Hillbillies.  Irrespective of the indicators and expert predictions, the only thing we know for sure is that a recession will come sooner or later.

So, here’s my prediction: we will experience a recession in the next two to seven years b/c my coffee is cold.

WHY RECESSIONS AREN’T SCARY

Lastly, a recession is not particularly scary in any case for many of us in the mortgage and real estate industries for several reasons:

(1) our industries are already in a recession; (2) rates will fall again when a recession hits, creating both refi and buying opportunities; and (3) the overall market remains huge and opportunities abound no matter what is happening in the aggregate.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646