A very popular Federal Reserve gauge indicates that the US Economy is headed for a second

quarter of negative growth, indicating the rule-of-thumb definition of a recession.

What should we do? Should we panic and start the drama queen situation, or should we start
looking for opportunities to make more money? In this video, I will talk about why this
recession will happen and how you could leave the drama behind and set yourself up for a
comeback!

Hi there, welcome to your channel The Foreigner in America where I teach locals and foreigners
everything related to money and personal finances, including investing in the markets, cryptos,
Real Estate and businesses. If you are someone like myself who wants to achieve greater wealth
in life, don’t settle for pennies but for Benjamins and loves money, please SUBSCRIBE to this
great channel, and hit that bell so don’t miss anyone of my weekly videos.

Also, check out my Instagram and Tik Tok at the Foreigner in America and my blog under the
same name and my book which I will leave a link below for you to check out. Without further
due, let’s begin! MAKE A TRANSITION

There was an update posted last Tuesday where Atlanta Fed’s GDP Now tracker is pointing to
an annualized gain of just 0.9% for the second quarter of the year.

Following a 1.5% drop in the first three months of the year, the indicator is showing an
economy that doesn’t have much to do in terms of improving, jobs are being lost because of
companies downsizing, Amazon, Target, and Walmart are stating that consumers are not
spending the same amount of money, and inflation is soaring into the double digits.

What this system does, called GDP Now is to follow economic data in real time and uses it to
project the way the economy is heading. Let me show you the data here, where you can see the
1.9% projection. You can see that there are a bunch of indicators to actually predict the GDP
and also the forecast was around under 3% for Q2, but now it’s dropped to under 1%.

So, what is causing that? Do I need to go out and spend all my money on clothes? Should I go
and buy an overpriced BMW? Should I go and buy a bigger house I can’t afford? No! You are not
to blame for any of this. 70% of the gross domestic product is related to consumer spending,
and that went down from 4.4% to 3.7%. And real gross private domestic investment will go
down from 8.3% to an 8.5%. These are all indicators of an economy that is not doing well.

Trade is also a big one in terms of GDP. The US trade deficit fell to 87.1 billion dollars in April,
down 20 billion from March this year. What this creates is our GDP to fall 0.13 percentage
points in Q2.

Also, corporate profits are coming down as consumers are not willing to spend the same
amount of money on stuff, they finally understood after video over video telling them to save
their money. Job growth is starting to decelerate, as companies like Tesla announced big
layoffs.

Some economists like Joseph Brusuelas, at RSM, says that the recession will happen in 2023,
not this year. So, there is no real good outlook for these upcoming two years. He says that the
notion of two consecutive negative GDP quarters is often considered a recession, it’s not true.
My friend, two negative GDP quarters is by definition a recession, so stop covering it up.

The national bureau of economic research which tracks recessions says the rule of thumb of
two consecutive negative GDPs is often true but sometimes it isn’t, like in 2020 where the
recession only had one quarter of negative growth. That comment is not helping at all by the
way.

Whatever anyone says, there hasn’t been a point in time between 1947 and 2022 where two
consecutive negative GDP’s didn’t indicate a recession, and this year isn’t the exception.

Another thing affecting the economy is the rates rising to control inflation by the Federal
Reserve which are totally necessary but will slow down the economy quite a bit since people
are not going to be borrowing money like before. Mortgages will slow down, car sales will slow
down, loans will slow down, and money spending is slowing down already.

Already Jerome Powell said that is won’t be easy to control it, meaning it will take a long time.
So, forget about inflation coming down in 2023 either. And treasury secretary Janet Yellen told
the Senate that bringing down inflation should be their number 1 priority. Of course, inflation
that is not controlled causes the rich to get richer, the poor to get poorer, and the middle class
to disappear. And where is the middle class going? Up or down? You guessed right! The middle
class goes to the poor class if you cannot control inflation, since their incomes do not match
how fast everything else is going up.

Allow me to tell you what the difference is between an average American and a financially
savvy American both in the middle class in my Foreigner Insight for this topic.

Forget about the rich, people whose net worth is well over 7 figures, 10 million dollars and
beyond, own corporations, have hundreds of tax deductions, and manage to keep and grow
their wealth in any market, especially in the down market like this.

Also, forget about the poor, making less than $30,000 a year, getting support from the
government, food stamps, unemployment checks, and welfare. Nothing against them, just it’s
not what I’m focusing on for this particular example.

I am focusing on you, middle class, lower middle, average middle, and upper middle, making
from 35k to anywhere close to a million dollars a year. And yes, someone making 250, 350, and
in that range is still considered middle class, the upper middle class.
One person is person A who has a job that pays $80,000 a year and no debt. It’s his only source
of income, cannot move to a different job right now because it’s too risky since companies are
starting their layoffs and hiring freezes due to the state of the economy. Person B is also middle
class but has invested his money on assets like houses.
So both person A and person B go to the supermarket and find out that their meat is up 40%,
their chicken is up, their milk is up, everything! IT is a disaster. Every month or two things go up
in price even more. Gas is unbelievable at the pump, and you are spending 300 or 400 dollars
per month only on gas, like a car payment.

Person A only relies on the job, which is not going up with inflation. Do you think a company
laying off thousands of employees is going to offer you a 20% raise to keep up with inflation?
You are lucky if you don’t end up being one of those guys being laid off.

Person B on the other side also has a job, also makes 80k, but is getting income from his houses
which is going up every end of lease, and the houses are going up in price which makes his net
worth also increase. If he has mortgages on the properties, those only go down in time, since
they are fixed.

If person A gets laid off, he’s done. Hopefully this person A has a solid emergency fund that
covers 100% of his living expenses and debt for six to twelve months, otherwise he will be in
deep trouble. Person B also needs an emergency fund but has an additional income from the
properties. You can also get income from dividends but require a lot more money to produce
the same amount than with rentals.

Same way you save up to buy your personal property, consider getting an investment property.
Best decision ever. When the economy is solid, inflation is 2%, companies are hiring, and money
is in the air, person A with one source of income is happy and safe.

But in these times, this person A is in great danger of falling from the middle class to the poor
class very quickly. That’s how people end up homeless, when they lose their homes not able to
cover the mortgage payment or are kicked out of their apartments not able to pay rent.

When you are kicked out from an apartment, your record is stained, and it is very hard for
another place to accept you. Your credit score gets ruined, which means your life will be
miserable. Although a lot of people say a credit score is not important, trust me IT IS. I have an
826 and went from zero since I immigrated from a foreign country. I know best the struggles
that this causes.

So, please, fund your emergency account with six months of expenses. It is a must do. Include
food, transportation, and mortgage or rent payments.

Stop pretending you are Warren Buffett and timing the market. Houses will go down eventually
but nothing you really care about. Stocks will do down as well but nothing that you should care
because you are investing LONG TERM. If you are a day trader, yes, be careful you can lose a lot
of money. You are not speculating, you are investing long term, buying a property for 50 years
and gifting it to your kids and grandkids.

This is the only way besides budgeting and not spending money on stupid things you don’t need
to overcome a recession and reduce risk to come out much better and stronger financially.

But remember, TAKE CONTROL OF YOUR LIFE AND TAKE CONTROL OF YOUR MONEY!! Thanks
a lot for watching this video, if you enjoyed it and found useful information give me a LIKE and
subscribe and hit the bell so you don’t miss any of my videos as soon as they come out. Have a
great day, don’t lose any money, and I will see you next time!