Dividends and looking for signs on the next recession

10 years ago the last recession ended, economies go in cycles so when is the next one? The reality is we do not know but the classic line is if your neighbour loses his/her job it is sad, when you lose your job it is a recession.

Ben Casselman of the New York Times News Service offered some indicators:

1. The unemployment rate  if it rises and the rate of change is going higher. Because of the nature of the keeping of the data the rate is seen as a lagging g indicator. However, in the past with unemployment low and trending downwards there is less than 1 in 10 chance of a recession in a year.

Note baby boomers are retiring at a rate of 10,000 a month which helps keep unemployment rates lower.

2. The Yield Curve – the curve shows the difference between short and long term rates, when long term are lower the curve is inverted. At the moment,the Federal Reserve believes the chances of recession are one in 3.

3. The ISM Manufacturing Index – each month the Institute for Supply Management surveys purchasing managers about their orders. Ratings above 50 indicate expansion  less than 50 slowing down.

4. Consumer Sentiment- what we consumers buy drive the economy. At the moment the index is flat.

Linking to dividend paying stocks, experts will examine a variety of information to determine where an economy we are. Individually if you are able to live on less than your income you will have savings. Some of the savings go into investment and over the long term if the bulk of your investments are in dividend producing stocks, you will be able to weather any recession and plan for the future

There are more questions than answers, till the next time- to raising questions.

 

 

 

 

 

 

 

 

 

 

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