I can tell you when the next recession will begin…
As we were creating my latest product, True Wealth Systems, we discovered an incredibly simple indicator that has correctly predicted 10 out of the last nine recessions over the last half-century.
(I say “10 out of the last nine” because it once predicted a recession that didn’t come – and that was over 40 years ago.)
Take a look:
I have two good pieces of news for you today…
[ad#Google Adsense 336×280-IA]The first piece of good news is: As you can see from the chart, this indicator typically gives us plenty of lead time before a recession begins, and it’s not signaling now.
The second piece of good news is: Right now, this signal is a LONG WAY from signaling a new recession…
Let me explain what our simple indicator is… You might laugh, it’s so simple. But simple is part of what we want to do in True Wealth Systems… There’s elegance in the simplicity. And when it’s simple, it’s easy to understand why it works… and why it may continue to work.
Our simple indicator signals when short-term interest rates rise above long-term interest rates. That’s it. (Specifically, it’s when the interest rates on one-year Treasurys go higher than 10-year Treasurys.)
This is an unnatural situation – an artificial one. Why? Naturally, you should demand more interest for a longer-term loan.
But you see, the government controls short-term interest rates. And when it wants to “put the brakes on the economy,” it raises short-term interest rates. When it raises short-term interest rates so high that one-year rates rise above 10-year rates, the government has gone too far.
The economy can’t handle that unnatural situation. But it takes a while to filter through. And a year later (or so), a recession begins.
Right now, based on this indicator, we’re in no danger of recession.
On the contrary, based on this indicator, we’re at risk of “bubbles” in the economy. The government has created the opposite unnatural situation… It has cut short-term interest rates to essentially zero, and it has promised to keep them there for “the foreseeable future.”
It takes a while for the effects to filter into the economy… But a year from now, the economy could be soaring because of this unnatural situation. This is what the government wants. Then, eventually, it will want to put the brakes on… And the cycle will repeat.
It is safe to say our recession indicator won’t signal for well over a year – more likely years from now. And after the signal, it then takes roughly a year for the recession to kick in.
In short, you’ve likely got years of boom ahead of you… Our True Wealth Systems indicator says recession is years away.
(We’ve also developed a totally different True Wealth Systems indicator that pinpoints the end of a recession before anyone else knows it’s happened. But that’s a story for another day…)
[ad#article-bottom]You can pile many other factors in of course… The economy is certainly a complicated beast.
But again, we like to keep it simple. Our extremely simple True Wealth Systems recession indicator has successfully predicted 10 out of the last nine recessions.
Right now, it’s saying there’s no recession on the horizon… Boom is more likely than recession. And its track record makes it worth paying attention to!
Good investing,
— Steve Sjuggerud
P.S. This simple indicator is a great example of the power of what we’re doing in True Wealth Systems… Knowing exactly when a recession is around the corner will let you sell a business or property closer to the top of the cycle, not at the bottom of the recession.
The money you keep by following this one indicator alone could pay for your True Wealth Systems subscription a thousand times. And we’re tracking dozens more profitable indicators in True Wealth Systems… To learn all about it, click here.
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Source: Daily Wealth