The Great American Recession

It has been over a decade since the end of The Great Recession. As another downturn starts, an open issue is whether this one will look like the worst economic beating since WWII.

The conclusion about a comparison between the two is that they have little in common.

The Great Recession was triggered by a global economic crisis, but that is not how Americans experienced it. The drop in gross domestic product was not triggered by inflation. That, for people who suffered in the 2007-to-2009 downturn, was among the very few blessings.

The current recession will begin with unemployment at 3.6%. In some ways, that is a continuation from the 3.5% figure in February 2020, just before the virus hit. The strong jobs markets was interrupted by the effects of the COVID-19 pandemic. The current jobs market is in extremely good shape. Unemployment peaked at 10% during The Great Recession. It is not likely to top 5% this time. The demand for workers today is too great. Even a drop in corporate profits will not be enough for the  current unemployment rate to triple.

Housing is in much better share than it was in 2007. Banks have learned their lesson. They no longer offer variable rate mortgages to people with low credit scores. Even with these restrictions, the housing market has been extremely strong, up 20% year over year in most months of 2022. Prices may reset in some markets, but will not drop by half as they did in Las Vegas and some parts of Florida during the last recession.

Inflation will be the primary cause of the current downturn. It may not go away for years. Compensation will not keep pace. Consumer purchasing will suffer. However, a hobbled consumer is not the same as one who is out of work entirely.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.