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Are You Prepared?

October 10, 2016 | Toby Madden

What can go wrong? Real estate prices and transaction activity are increasing, the stock market is near record highs, inflation is low, interest rates are low, and we have record employment and output in the United States. This is the Goldilocks economy! Of course not everyone is sharing equally in this economic expansion, as wealth inequality is huge and some sectors of the economy are hurting. Even with these pitfalls, in the short run it looks like the United States economy will continue to grow. Third Quarter GDP should increase by about 3 percent (annualized).

Before you get stuck in complacency and think this economic expansion will last forever, remember after expansions come contractions. Recession is coming. The big questions are when will it arrive, how bad will it be, and how long will the recession be. The recession will probably result from some unanticipated shock to the economy.

However, we do know that major demographic and economic trends are underway that will have a big impact. The workforce is hardly growing, which is negatively affecting our growth rates. The federal government has promised trillions in social security and Medicare payments, which are coming due soon. The Federal Reserve will raise rates someday, which will increase borrowing costs and hurt real estate markets.

So be prepared! One way to be prepared is to attend the IREM Fall Conference and attend my session Economic Outlook: 2016 and Beyond.

About the Author
Toby Madden is an economist with Power Parametrics. He is also an author, consultant and professional speaker.

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