When Will the Economic Recession End? How to Know In Advance

Posted on February 9, 2010
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Ask two different economists when a recession will end, and you’re likely to get four different answers. That’s right, they don’t really know – at least not in advance. But despite this, I am going to show you a very simple way to find out for yourself when a recession will end.

Knowing anything in advance would be a blessing – from the birth date of your first child to the winning horse at the race track. But imagine if you could see into the future and tell when an economic recession would end? Your business would soar, your job offers would multiply, and you would be ready for it all.

So, how do we tell when an economic recession will end? The answer is extremely simple – and yet it has been proven over many decades of data this last century.

In fact it is so simple your children could research it in the comfort of your own home.

A wonderful little book called “The Wall Street Waltz” holds the answer – written in 1986 by Ken Fisher. Fisher was one of the first to discover that the stock market actually has a magical way of leading the overall economy. This means that the stock market will start going up before an economic recession is over.

Don’t believe it? Let’s look at our most recent example: the 2008 recession. The market started going up in March 2009, and the economic recession was announced over in October 2009 – a lead time of around 5 months. Or perhaps the recession before that – 2001 to 2003. The market started rising in March 2003, and the recession was announced over in July – 4 months later.

But there are many more: markets in 1952 declined before a recession was announced in 1953. The stock market had predicted an economic recession again – and the end was no different.

Want more proof? Recessions in 1957, ‘60, ‘67, ‘74, early 90’s and even our latest in 2008 show the same pattern. Six months is the average time that the stock market will lead by. While some will be more, or less, six months is a general rule.

So how can you turn this information into $$? Well, considering we have had at least 3 economic recessions in the last 20 years, you can bet there will be another one in your lifetime. But when the next one hits, you’ll know in advance. And when it is about to end, you’ll be out there getting that job you want or the customers who are coming back to buy!

Learn more about trading and investing. Stop by Dave McLachlan’s site where you can get your free stock market research – designed for people just like you.

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