Skip to content
Deacon Keith Fournier Hi readers, it seems you use Catholic Online a lot; that's great! It's a little awkward to ask, but we need your help. If you have already donated, we sincerely thank you. We're not salespeople, but we depend on donations averaging $14.76 and fewer than 1% of readers give. If you donate just $5.00, the price of your coffee, Catholic Online School could keep thriving. Thank you. Help Now >

Recession looms, what should we do?

Free World Class Education
FREE Catholic Classes

By Marshall Connolly (Catholic Online)
6/25/2018 (1 year ago)
Catholic Online (https://www.catholic.org)

How can you prepare?

For the past 60 years, the Federal Reserve's yield curve has predicted recessions. Now, as the yield curve shows signs of inverting again, Wall Street and others are preparing to face what could be a worse recession than 2008. 

Knowing a recession is coming will allow us to prepare.

Knowing a recession is coming will allow us to prepare.

Highlights

By Marshall Connolly (Catholic Online)
Catholic Online (https://www.catholic.org)
6/25/2018 (1 year ago)

Published in Business & Economics

Keywords: recession, yield curve, economy, Catholic, depression


LOS ANGELES, CA (California Network) - Making sense of Wall Street news seems a lot like practicing voodoo and pseudoscience. Read any price prediction and you're likely to feel like you're consulting a fortune-teller. But there is one metric on Wall Street that is simple and clear -- the yield curve. 

The yield curve is a measurement of the gap between the yield of 10-year treasury notes and 2-year treasury notes. You can learn more about that here. What's alarming is the gap between the notes is now just .34 percentage points, according to the New York Times, and the last time the gap was this close was in 2007, just months before the Great Recession. 

In the past 60 years, there have been nine recessions, and all of them have come after a yield curve inversion. The time between inversion and recession is between six months to two years. 

Recessions are a natural part of the economy. The same forces that make the economy boom eventually make it go bust. The job of the Federal Reserve, and in part, the federal government, is to minimize the harmful effects of this cycle. In recessions, the Fed cuts interest rates and prints more money to pump money into the economy. As people spend the money, the economy is invigorated. If the economy booms too much, inflation starts. Inflation is controlled by raising interest rates and removing money from circulation. 

The result of this practice should be short recessions and long periods of paced economic growth.

This time, there's reason for concern. Many of the protections built into the economy after the Great Depression and Great Recession have been rolled back by the federal government, which has been overly-friendly to Wall Street. At the same time, the current administration has slashed the safety net for ordinary Americans, making it harder to access shrinking benefits. 

The final concern is that like the Hoover administration, the Trump administration could favor supply-side solutions to a recession, which have a high probability of exacerbating the problem, turning a recession into a depression. 

There's a lot of talk about Wall Street and recessions, but what's more important for most is what happens on Main Street. We have a nasty habit of measuring the economy by how well rich people do. But what about the rest of us? 

A recession means unemployment. Even people who are secure in their careers face the risk of unemployment. Wages stagnate, it's hard to get a raise when the company is struggling. Jobs get harder as workers are asked to pick up the slack from cuts. 

At home, it becomes difficult to pay bills, especially if a dependent cannot work. 

There are social services, but due to cuts, those services might not be adequate. 

What happens when people cannot get enough? Crime flourishes, radicalism blossoms, and the danger of violence increases. People with nothing to lose are the most dangerous. 

As Catholics, what can we do to prepare for this eventuality? 

The short answer is to save. Saving money is always a good way to ensure you have enough to get through tough times. No matter how little you make, try to save something. When you do spend that saving, spend it wisely. Spend it to keep yourself working or fed. 

There are many ways to save money in a recession, such as moving in with friends and relatives. 

There are other things you can do too. Diversify your job skills. Make yourself more valuable at work. Flexible workers are the last to be let go. 

If you own a house, plant a garden. Growing your own food will save you money later. 

If you are one of the lucky people to do well during a recession, then remember your obligation to the less fortunate. Take in and help the family. Support charities that help the poor. Be generous, especially with food. 

Understand, most people just need a little help. Even in a recession, most people find a way to make ends meet. 

A recession is coming, and this is a natural development. It should be expected within the next two years. And we should be prepared for when it happens. Even if nothing happens to us, bad things will happen to our neighbors, and we have a moral obligation to aid them if we can. 


Comments


More Business & Economics

Profits & Politics over People, why California is paying more to sit in the dark Watch

Image of Millions of Californians will be impacted by blackouts today, including millions who cannot work or attend school in affected areas.

Californians pay a lot for electricity. According to one website, Californians pay the 8th highest rate in the nation, at an average of ... continue reading


Judgment reached in Knights of Columbus contract lawsuit Watch

Image of Knights of Columbus

A federal jury concluded Thursday that the Knights of Columbus breached a verbal contract with a technology company that hoped to become a ... continue reading



What does a just economy look like? One bishop reflects Watch

Image of Economy

The head of the U.S. bishops' Committee on Domestic Justice and Human Development called on Catholics to reflect this Labor Day on Catholic ... continue reading


Why organized labor is (still) a Catholic cause Watch

Image of Labor movement

At a time when labor unions are weak, Catholics still have a place in the labor movement, said a priest who emphasized the Church's ... continue reading


Businesses beware! The IRS will tax robots too Watch

Image of A popular meme suggests rising wages are the cause of automation, but in reality automation is inevitable.

Businesses looking to robots to automate labor might have to think again, the IRS wants a cut.  LOS ANGELES, CA (California Network) - ... continue reading


Never Miss any Updates!

Stay up to date with the latest news, information, and special offers.

Catholic Online Logo

Copyright 2019 Catholic Online. All materials contained on this site, whether written, audible or visual are the exclusive property of Catholic Online and are protected under U.S. and International copyright laws, © Copyright 2019 Catholic Online. Any unauthorized use, without prior written consent of Catholic Online is strictly forbidden and prohibited.

Catholic Online is a Project of Your Catholic Voice Foundation, a Not-for-Profit Corporation. Your Catholic Voice Foundation has been granted a recognition of tax exemption under Section 501(c)(3) of the Internal Revenue Code. Federal Tax Identification Number: 81-0596847. Your gift is tax-deductible as allowed by law.