Chart Patterns and Indicators Every Forex Trader Needs to Know
By Curtis Phan
/ 2023-10-30
If this is going to be your first ride in the world of Forex trading, you might have heard something...
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We’re all familiar with the saying, “a recession is when your neighbor loses their job.” And while that may be true on a personal level, it’s definitely not the case when it comes to the global economy. Several things can signal an impending recession and cause businesses and consumers alike to cut back on spending to save money. At the goldco reviews, you’ll learn what investments will definitely survive amidst the recession. A recession, in turn, can lead to even more job losses and a further decrease in economic activity – exacerbating the situation and leading to an actual recessionary period. So, what are some early warning signs that a recession might be on the horizon? Here are a few things to keep an eye out for.
The Uncontrolled Rising of the US Dollar
For us, it’s such a common occurrence that we don’t really think about how our currency affects the global economy. But when the US Dollar rises too quickly, it can be a sign of economic instability and possible recession. That’s because it makes imports to foreign countries more expensive – leading to a decrease in demand for those goods. This has an impact on businesses that export their products as well, leading to a decrease in profits and job losses.
The Decline of Oil Prices
Oil prices are closely linked to the global economy, as many countries depend on oil for their energy needs. When oil prices consistently fall, it can be seen as an indicator that economic growth is slowing down. This is especially true if the drop in oil prices is sudden and unexpected, as it can signify decreased consumption and reduced demand. The current war between Ukraine and Russia is putting oil prices in a precarious position, so it’s something to keep an eye on.
Increase in Bond Yields
Bond yields tell us how much investors are willing to pay for a government or corporate bond. If yields begin to rise, it’s usually seen as a sign that investors are becoming more cautious and uncertain about the future. This could be because of a significant amount of debt in the market, or it could be due to political uncertainty – both can have an effect on the global economy. According to some economists, a recession can be predicted when 10-year Treasury bond yields fall below the 2-year yield.
Slower Economic Growth
Businesses and consumers alike can be affected by slower economic growth. When businesses experience a decrease in profits, they tend to lay off workers or reduce pay raises. This can lead to increased unemployment and lower consumer spending – both indicative of recessionary pressures. Additionally, when the gross domestic product (GDP) slows down, it’s usually seen as a sign of an impending recession. Keep in mind that these are just a few signs that the global economy could be heading for a recession – there are many others as well. It’s important to be aware of any changes in the market and to keep an eye out for signs of possible economic instability. By doing so, you can better prepare yourself and your business for the possibility of a recession.