When Will the Economic Recession End? How to Know In Advance
Economists and investors in finance centres around the world have been asking this question for decades: How can we tell when an economic recession will end? I am going to show you exactly how.
Times during an economic recession always seem tough, but there comes a time when they come to an end. Imagine if you or your business were ready to take advantage of the new economic times because you saw it coming? Or maybe you could have your resume ready for that new job offer, just as more jobs become available.
So, how do we tell when an economic recession will end? The answer is extremely simple - and yet it has been proven over many decades of data this last century.
In fact it is so simple your children could research it in the comfort of your own home.
And this is where we look to the stock market for the answer - as Ken Fisher outlined in his book, “The Wall Street Waltz”, the stock market has a magical way of leading the overall economy. Fisher discovered that the stock market will start going up before the end of an economic recession is announced.
Let’s look at an example: Half way through 1948, the market topped and started to decline. It wasn’t until 1949 that the recession “hit” consumers. Then, just when people were despairing that it might last forever, the began an upward climb half way through 1949, and in 1950 the recession was declared over.
But there are many more: markets in 1952 declined before a recession was announced in 1953. The stock market had predicted an economic recession again - and the end was no different.
We can see the same pattern in 1957, 1960, 1967, 1970, 1974, and then in more recent recessions like the early 1990’s and 2002. The average time-frame that the stock market leads the economy by is 6 months. Of course some will be more, and some will be less, but as a general rule 6 months is a good one to go by.
How can you use this? Well, you can bet in your lifetime there will be another economic recession. But this time, when it happens you’ll be ready to take full advantage of the time when it ends!
Learn more about trading and investing. Stop by Dave McLachlan’s site where you can get your free stock market research - designed for people just like you.
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