The Economy Has Already Turned, Time To Adjust Is Fleeting Fast
The latest economic data suggests that inflation is easing. Now, officially down to just 3%. Of course, lagging data means that the economy may already be deep in the hole and diving. Real prices may still well be 30% to 50% higher than they were a couple of years ago. They may just not be growing as fast.
Unfortunately, businesspeople and investors who often thrive because they are optimistic, always think they have more time. They think they have another 18, 12, or 6 months before things really change.
When this happens it typically creates a downward spiral, with more businesses failing and making layoffs. By the time you realize the market has changed, it has often already flipped on you three months before.
No matter where you are at this turning point, there is little time to take action, and get ahead of it.
AI And Automation
Technology and globalization are dramatically speeding up changes. While this means that AI startups may have attracted a lot of capital in a short period of time, with soaring valuations, it also means the consequences and impacts are speeding up and are greater too.
In this case, even the most pro AI voices are concerned about the mass unemployment it is creating. It is already happening. Everyone has been trying to jump on the bandwagon, with automated checkouts in stores, ChatGPT, and AI bots for customer service.
It’s eliminating millions of jobs. Businesses don’t even realize the expensive and irreparable damage they are doing to themselves by implementing this too early, without understanding how it is ruining their SEO, customer experiences, and souring long term customer relationships and much of their recurring revenues.
Consider that almost 10% of the US workforce is employed in customer service roles according to the Bureau of Labor Statistics. Almost 18M remote workers on Upwork face their incomes disrupted by the implementation of AI chat bots as well. This does not count all the layoffs coming as consumers run out of money, businesses are crippled by higher interest rates, and a tighter capital environment.
Keep in mind that this is on top of the fact that we already only had around 60% of the population actively participating in the workforce.
Double digit unemployment could be here before most realize it. Consequently, many could find their incomes are cut off faster than they think. With no warning, and no real plan to survive it.
For Investors
If you don’t already have enough passive income, from a diversified portfolio that can keep cash flowing in a downturn, you should stop everything else you are doing, and establish that right now. You don’t know what will happen tomorrow morning.
Real estate remains one of the only asset classes that can produce passive income, and provides a concrete floor for asset protection.
In this phase of the market, assets that may do especially well include affordable housing, luxury real estate that acts as asset protection, and self storage.
