Recession?? I THINK SO!

People, What's good? Real Quick though......Money is not coming easy these days. People are struggling to make ends meet, save for their future, or achieve a comfortable lifestyle. In this blog, we will explore the current state of the financial system, analyzing the statistics of the last decade and how various sectors have been affected by rising costs. Additionally, we will provide some tips on how to save money and stay ahead in a volatile economy.

Let's get into it Real Quick....

To understand the financial system as of today, we need to go back to the 2008 financial crisis, the worst economic downturn since the Great Depression of the 1930s. The crisis resulted from various factors, such as the subprime mortgage market, the collapse of Lehman Brothers investment bank, and the interconnectedness of global financial institutions. As a consequence, millions of people lost their jobs, homes, and savings, and the global GDP shrank by about 5%.

However, the recovery from the crisis has been uneven and protracted. In the US, for instance, the unemployment rate that peaked at 10% in 2009 has gradually declined to 6% in 2014, only to surge again to 14.8% in April 2020 due to the COVID-19 pandemic. Additionally, the GDP growth has been sluggish, averaging around 2% per year, except for a brief surge of 4.9% in Q3 2021, mainly fueled by government stimulus and the reopening of businesses.

Another sector that has been affected by rising costs is the housing market. After the subprime mortgage crisis, the housing prices plummeted, causing many homeowners to default on their loans. However, in recent years, the housing market has bounced back, with the median home price reaching a record-high of $347,500 in June 2021, up 23.4% from a year earlier. This surge in prices has been fueled by low mortgage rates, high demand, and low inventory. However, it has also created a housing affordability crisis, with many people unable to afford a decent home or opting to rent instead, at exorbitant prices.

The medical sector has also experienced rising costs, with healthcare inflation surpassing overall inflation for the past decade. As of 2020, the US healthcare spending totaled $3.8 trillion, or 17.7% of the GDP, the highest among developed nations. The main drivers of healthcare costs include administrative expenses, pharmaceuticals, technology, and chronic diseases. As a result, many people are struggling to pay for their medical bills, or avoiding seeking treatment or preventive care due to unaffordability.

The car market is another sector that has been impacted by rising costs in various ways. On the one hand, the rising cost of labor, raw materials, and regulations has forced automakers to increase their prices, making new cars more expensive. On the other hand, the rising cost of used cars has created a shortage of affordable options due to the global chip shortage, which has hampered the production of new cars and fueled demand for used ones. As a result, many people are opting to postpone or cancel their car purchases or resorting to car-sharing or public transportation.

Given these trends, it is essential to save money and stay ahead in a volatile economy. Here are some tips:

- Create a budget and stick to it: Identify your income, expenses, and goals, and allocate your resources accordingly. Use budgeting apps or spreadsheets to track your spending and adjust your budget as needed.

- Cut down on unnecessary expenses: Eliminate or reduce expenses that do not align with your priorities or values, such as dining out, subscriptions, or cable TV. Look for cheaper alternatives or negotiate lower prices.

- Build an emergency fund: Save at least 3-6 months' worth of expenses in a separate account that you can tap into in case of an unexpected event, such as a job loss or medical emergency.

- Invest in your retirement: Contribute to a 401(k), IRA, or other retirement plan that offers tax advantages and compound interest. Start early and increase your contributions over time to maximize your returns.

- Seek financial advice: Consult a financial planner, advisor, or coach who can help you set and achieve your financial goals, optimize your investments, and mitigate risk.

In conclusion, the financial system as of today is complex and dynamic, with various sectors affected by rising costs and challenging conditions. However, by adopting prudent financial habits and strategies, such as budgeting, saving, investing, and seeking advice, we can navigate and thrive in a volatile economy. Hopefully, our government can get it together for all of our sakes. #RealQuick