Financial guru Jaspreet Singh let his sillier side show on a new episode of Minority Mindset, “Where Is the Recession?” First, he brought out a stuffed toy, “Guacee,” and then warned viewers against “just blindly following some guy on the internet,” a tongue-in-cheek disclaimer that Singh is not offering investment advice.
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It was all to get an important message across regarding the economy: Everybody has an agenda and everybody has an opinion.
“The best thing you can do to make financially smart decisions,” Singh said, “is to listen to people who disagree with you. That way, you can have a holistic opinion.”
That’s when he got very serious about the state of the U.S. economy — and how you can avoid being a pawn in the game.
Jaspreet Singh on How Inflation Works
Singh then took to his whiteboard to show how inflation works based on the laws of supply and demand, using illustrations of houses and buyers bidding on them. When there were a lot of prospective buyers and only one house, people bid above the asking house to secure the property.
When there are a lot of houses on the market and only one buyer, sellers are more willing to go down in price to sell their home quicker. Ultimately, this leads to the rise or fall of the entire market. The same is true not just with houses, but with all consumer goods.
Why We Aren’t in a Recession Yet
Historically, the last 11 out of the past 14 times the Fed aggressively raised interest rates, the U.S. entered a recession. “But a recession means the economy is cooling. It means people aren’t spending money,” Singh said.
This time, though, in spite of the U.S. Federal Reserve raising interest rates faster than they have at any time since 1981, Americans are still spending money, he explained.
“People are subsidizing their cash with credit. We are seeing debt rising at some of the fastest levels ever in the United States. We just broke a new record for historic credit card debt of $1 trillion.”
These spending habits may be keeping the country out of a recession for now, but economists believe there will be a breaking point.
“It’s good for the economy, but it’s bad for people. You are paying a premium to buy something, that isn’t making you any money. There’s also a breaking point for that. Consumers can only go into so much debt to finance your lifestyle,” Singh told viewers.
He continued, “Obviously, no one can accurately predict when Americans will run out of credit. But you have some economists saying that by the middle of 2024, this credit is expected to be tapped out, assuming that Americans continue spending money at the current trajectory they are at today.”