Signs of a major recession before 2023

Major recession before 2023 : If we have come into the world, we have to live - if life is poison then we have to drink it. Due to the outbreak of the Corona epidemic, the economies of the world had breathed a sigh of relief that now again there are signs of a huge recession. Like the corona epidemic, the epidemic of recession will also be on the whole world, and every person will be a victim of it. Those who ignore the recession and do not make any arrangements for the security of their future, be ready to face a dire future before 2023.

I am not teaching you the lesson of my knowledge. Maybe you all are unaware of this information that these signs of recession are visible in the world's largest economies. If their condition worsens, it is sure to have a big impact on the global economy. Even now its effect is being seen, it is a different matter that some are accepting it and some are denying it. Experts also believe that before 2023, the whole world will have to face a terrible recession and no one will be able to escape it.

What is Recession?

There is no universal definition of a recession, but economists often agree on the definition that a recession means a decline in normal economic activity within a country and should last for at least two quarters. If this decline in economic activity continues for two quarters i.e. negative growth, then it means that there is an economic recession in the country.

This recession depends on a particular geographical area, may occur in a particular country or state, but before 2023 there may be an economic recession in most countries of the world. 

It is just like a corona epidemic, in whose house someone died of corona, he believed that there was corona epidemic and in whose house no one died, he did not believe that there is an epidemic like corona.

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What is the basis of the recession signal?

The whole world saw the Russia-Ukraine war seriously for a few days, but now people are thinking that what should we have to do with that war. Will saying that our neighbour's house is on fire, what do we have to do with that?

Global supply chains disrupted across the world due to the Russia-Ukraine war are adding fuel to the fire. Of the two big economies we are talking about here, one is the largest economy in the world and the other comes second among the largest economies of the world. That is, America and China. China is witnessing the biggest recession since the start of the corona virus epidemic. Signs of recession in the US economy are also witnessing at the same time, there are . Let us understand in detail.

Bond market also giving terrible warning 

The bond market is giving dire warning signs at the moment. The recession predicted by the bond market over the past 60 years has never been proven wrong. Economy experts believe that the reversal of the US Treasury note yield curve is not a good sign. An inverted yield curve indicates that investors are more concerned about the short term than the long term. Interest rates or EMI on short term bonds are rising. Although the curve is not yet inverted, it is close to turning upside down. Treasury notes are an essential debt to the US government. It is believed to be a safe investment for investors. Here the risk of non-payment of loan is very less.

Increasing attraction of investors in the bond market

These government bonds have seen a flurry of interest over the past few weeks due to geopolitical tensions and weak financial conditions. Last week, the US central bank the Federal Reserve said that it could raise interest rates by about six times in 2022 itself. This is causing investors to move away from more volatile investment options such as the stock market and more reliable investment options such as treasuries. 

But as more and more people join the bond market, yields drop as more people join, making it a less attractive investment option. These days many investors are also looking to alternatives options such as bitcoin and cash, which traditionally offer less stability than bonds. Long term bonds give higher returns.

Reversal of the Yield Curve Before Every Recession

It may surprise you to learn that every recession since 1955 has been preceded by a yield curve inversion, according to research from the Federal Reserve Bank of San Francisco. The inversion of the curve does not mean that the stock price will fall. An inverted curve usually indicates that a recession is on the way in the next 12 months. Sometimes it takes years.

The yield curve turned inverted in 2005, but began a recession in 2007. Perhaps you all remember that a few years ago in 2019, the curve turned upside down and after that the fears of recession started coming. This was also seen in 2020 but often experts believed that this is not a matter of concern, it was only due to corona virus epidemic Many market experts are talking about danger. Experts believe that a recession may occur. According to Mark Zandi, chief economist at credit rating agency Moody's, the ratio of the likelihood of a recession in the US economy in the next 12 months is 1:3.

Stock market crash

The A&P, S&P have declined while the Dow has also declined significantly. Inflation figures also came in America. The Core Personal Expenditure Price Index is up 5.2 per cent from a year ago. This is indicating a crisis in the US economy. The ongoing Russia-Ukraine war between Russia and Ukraine has led to a sharp rise in commodity prices around the world. This can have an impact on the performance of companies in the second quarter as well.

On the other hand, China's economy has also faltered. Due to Corona, there is a situation of lock-down in many cities. This has very badly affected the supply chains around the world. This has a huge impact on multinational companies. The Nasdaq is now bearish and is down 23 per cent from its highs. The S&P 500 is down 15% from its high and the Dow is down 13% from its record high.

Bank of America analysts have cut the S&P 500 forecast for this year by 100 points to 4,500. He says that the index may fall by another 10 percent. It is being speculated that due to this the recession in the country is going to increase very badly.

Fear of Recession

However, many economists experts consider that there is no immediate threat of recession in the US. According to NBC News, Ian Shepherdson, chief economist of the Pantheon Macroeconomics Research Group, said in a note about the GDP figures that this is just a ruckus, not an indication. The economy is not heading towards recession. Bill Adams, chief economist at Comerica Bank, also agreed, saying consumer spending, investment and job growth remain healthy.

But on the other hand many experts believe that there are many challenges for the US economy. James Knightley, chief international economist at financial services group ING, said: “We are in a situation where the increase in oil and food prices has increased pressure on the public pockets but earnings are not increasing.

Recent consumer sentiment data also shows that people are very worried and very scared of rising inflation. Interest rates in the US have been very low for many years, but this is about to change soon. The Federal Reserve has indicated that interest rates will be raised again very soon.

Unemployment may increase

Experts say that if these signs turn into reality, then unemployment may increase in the country and the pace of wage growth may slow down. Some economists say that inflation may persist for a long time in the country, which has already reached its 40-year peak. Bank of America said in a note to its customers last week that the risk of recession is low but could increase in 2023. This may happen because inflation may force the Fed to increase the interest rates.

The talk of recession in the economy has started. There are clear signs of recession in economic activities in many countries of the world including India. If the growth rate or GDP of an economy is continuously declining quarter on quarter, then it is considered a big sign of economic recession.

The talk of slowdown in the economy has started. There are clear signs of slowdown in economic activities in many countries of the world including India. When the economy moves into recession, there is an all-round decline in economic activity. There are many other parameters which indicate that the economy is heading towards recession.

Earlier in the year 2007-2009, the economic downturn had created a ruckus in the whole world. It was the biggest economic crisis since the 1930s recession. Now we are going to face the economic crisis of 2023 very soon.

What is the measure of recession in the economy?

There is some scale to assess the economic recession, by looking at which we predict that the economic recession is about to come. Below I am discussing some of those points :

1. Continuous fall in economic growth rate

If the growth rate or GDP of an economy is continuously declining quarter on quarter, then it is considered a big sign of economic recession. Growth rate is the rate of increase in the output of a particular sector or economy of a country.

If the country's growth rate is being mentioned, then it means the growth rate of the country's economy or the Gross Domestic Product (GDP). GDP is the sum total of all products and services produced in a country in a given period.

2. Decline in consumption

The ground level reality is that due to inflation, people have given up even bathing with soap and shampoo. Another big sign of an economic recession is that people reduce consumption. During this period, along with ordinary things like biscuits, oil, soap, cloth, metal, the sale of houses and vehicles also decreases. Actually, in times of recession, people try to control the expenditure on the things they need.

Some experts consider the decline in vehicle sales as an early sign of recession. He argues that people prefer to buy cars when they have extra money. If the sales of vehicles are decreasing, it means that people are saving less money.

3. Decline in Industrial Production

If the wheel of industry in the economy stops, new products will not be made. There are major role of private sector in this. During a recession, the output of industries will decrease. Mills and factories are closed due to declining sales in the market.

If industrial production in the market falls short then many services are also affected. It includes all services like freight, insurance, warehousing, distribution. Many businesses like telecommunications, tourism are only service based, but their business is also affected when there is a huge drop in sales.

4. Unemployment Rises

When there is a recession in the economy, employment opportunities are reduced. Industries are closed due to no production, there is no transport, sales are stalled. As a result, companies start laying off employees. This increases unemployment in the economy.

5. Decline in the stock market

The shares of those companies increase in the stock market, whose earnings and profits are increasing. If the earnings estimates of companies are continuously falling and they are not able to live up to the expectations, then it is also seen as an economic recession. Their margins, profits and performance are continuously declining.

The stock market is also an investor's medium. If people have less money then they will also reduce their investment in the market. Because of this, the price of the shares may also fall.

6. Decreasing Liquidity

When there is low liquidity in the economy, it can also be considered as a sign of economic recession. If you understand it from the general mindset then people avoid spending or investing money so that they can use it in bad times. For this reason or because of this fear, they keep money with them. The current situation is also similar.

Overall, all the reasons for the slowdown in the economy are related to each other. Many of these factors are presently present in our economy. For this reason, the fear of economic slowdown is constantly being created among the people. The government is also doing everything possible to stop it.

How deep is the fear of recession among the common people, it can also be gauged from the fact that in the last five years, the number of people searching 'slowdown' in Google's trend was one or two percent, which has now reached 100. That is, the fear of recession has struck home in the minds of the common people.

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Conclusion 

Whether you believe it or not, the effect of recession is definitely going to affect our lives. Aren't we all seeing signs of recession around us? Are all the above mentioned symptoms not being seen in our country? I suggest to my friends that you should go through life in such a way that you avoid the troubles ahead. You may lose your job, your business may be closed, so be alert and careful beforehand.