Recession + Asset Inflation
Prediction #6
Today I'm sharing 4 slides with you from my upcoming presentation - Review of 2024 Economy & Market Predictions
If you want to see how those 2024 predictions panned out and how things have evolved since 2024, register here to attend this upcoming webinar: https://lu.ma/454enhnaEvery year, I make Economy & Market Predictions based on the charts and data I study.
If you have been following me for a while, you know I study the Economy & Market almost daily.
Usually around an hour / day for over 15+ years.
For many people, it may seem dry and boring.
For me, I find it fascinating.
I love watching what's happening in the Economy & Market. It's dynamic, constantly changing and challenging.
As an investor, we are investing in the future based on what we see today.
That means, we are all in some ways trying to figure out where things will be going, not where they are today.
If it's as easy as investing based on today, then everyone will be a gazillionaire.
Because the information is already out there.
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The people we hear today who are making money from their investments are the ones who made the right assessment years ago when they decided to invest in the right asset.
For me, my process is to start at the big picture - trends that will be around for the next 5-10 years and then looking at what's going on today.
I try to connect the dots between long term FUTURE and TODAY to see where things could be going in the next year or two.
The gap between the FUTURE and TODAY helps me create "themes" for the year.
That's how I come up with my predictions on the Economy & Market.
Because I'm not God nor do I have a crystal ball, I don't get 100% of them right.
The key here is to realize that I don't need to be 100% right.
I just need to be right on the important things.
Because investing is like surfing.
A strong wave could wipe me out or it could push behind me with a powerful momentum and create wealth for my partners and I.
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Now, let me share with you one of my predictions from 2024:
Prediction #6
US/Canada teeters around recession
Asset inflation in Canada
Here are 4 slides from the upcoming presentation:
The first 2 charts show us where the economy has been for the past few years.
As you can see, the US is doing better than Canada right now - See the green bars showing growth.
The GDP is still growing in the US compared to Canada is teetering around recession.
That was the 1st part of Prediction #6.
The reason I believed the US economy would "escape" a recession in 2024, was because 2024 was what's commonly referred to as an "Election Year".
It's a common practice by the politicians in power to do whatever it takes to "juice" the economy to best help them get re-elected.
In the case of the US, Biden pulled out the the re-election campaign last minute and turned it to Kamala Harris.
They did whatever they can to ensure the economy didn't go into a recession.
This isn't a conspiracy. It's just what politicians do what they do best - to fight to stay in power by throwing money at just about anything.
Just look at what Trudeau is trying to do: GST holiday and the proposed $250 rebate cheques for working Canadians.
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The 2nd part of Prediction #6 was Asset Inflation in Canada.
I made that prediction because I believed with all the money they printed during the pandemic, it will have to continue to go somewhere.
Where would they go?
Into financial assets
As you'll see in the charts below, that happened!
Real estate continues to go up and so are stocks.
The most common and popular financial assets for Canadians to put their money into.
This is a sad situation for the Canadian middle class.
If the economy isn't growing as fast as the increase of financial assets, that means if one doesn't own financial assets, they are becoming poorer as a result.
That's also what's happening.
The middle class is getting worse off than previous years.
There's no sign that trend is slowing.
This means, the comfortable lifestyle and the pride of Canada's strong middle class will continue to shrink and disappear.
As a society, there's significant consequences of that impact to Canada in the long term.
I will hold off commenting on that until future newsletters.
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There you have it.
That was one of the predictions I made in 2024.
I will be going over all 10 predictions I made for 2024 in my upcoming presentation - Review of 2024 Economy & Market Predictions
If you want to see how those 2024 predictions panned out and how things have evolved since 2024, register here to attend this upcoming webinar: https://lu.ma/454enhna
If you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
January 21, 2025
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