George Kamel - Are We Headed For A Recession? (Get Ready)

Episode Date: June 2, 2025

Could we be heading into a recession—or is the media just being dramatic to get clicks? In this episode, you’ll learn what a recession really is and how to protect your money if the economy goes south. Next Steps: • 🎥 Watch my video Best Way to Pay Off Debt Fast (That Actually Works). • 📈 Are you on track with the Baby Steps? Get a free personalized plan. • 💵 Start your free budget today. Download the EveryDollar app! Connect With Our Sponsors: • 🔒 Get 20% off when you join⁠ DeleteMe⁠. • 💸 Learn more about opening a high-yield savings account with⁠ Laurel Road⁠. Explore More From Ramsey Network: 🎙️ The Ramsey Show   🍸 Smart Money Happy Hour 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💡 The Rachel Cruze Show 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

Are we headed into a recession? Are we already in one? Or is all this economic gloom and doom just another case of the media fear-mongering for clicks? Well, before you start panic buying super mega-packs of Charmin ultra-strong, let's talk about what a recession really is, and more importantly, how you can be ready for it. But before we jump in, give those like and subscribe buttons a click

and share this video with your hoarding Aunt Edna, who still has a basement full of vintage Charmin from 2020. And that was a good year for Charmin. I don't know, the berries were just right that year. Great harvest. The cotton was just right that year. really gave it a great sheet. Almost a oily viscosity.

The mouth feel on that Charmin 2020 vintage. I'm sorry, what are you talking about? Okay, first of all, what even is a recession? That's important to cover. Technically, it's when the gross domestic product, or GDP, has been down for two quarters in a row, which is six months or three point five dog years. And in case it's been a while since your last economics lesson,

GDP is the total value of all the goods and services produced within a country. But even if GDP has been down for six months straight, it's not officially a recession until the National Bureau of Economic Research says it is. And they monitor all kinds of data, like personal income, employment, consumer spending, wholesale retail sales, industrial production, and GDP. And the NBER defines a recession as, quote, a significant decline in economic activity that spread across the economy and that lasts for more than a few months. So basically, a recession is when the economy goes down in the dumps for six months to a year. And this usually means. the stock market tanks, companies lose money or go bankrupt, and people lose jobs. Not ideal. There are several things that can lead to a recession, including inflation, check, economic shock,

like a pandemic, wars, oil prices, or tariffs, check, check, check, check, check. And lastly, asset bubbles, which is when people are so excited to invest in certain assets, like stocks, bonds, or property, that they drive the price way above the actual value. And eventually, that bubble bursts, people start selling, and the value of the asset takes a nosedive, which then causes big losses for investors and businesses that can spread to the entire economy. That's exactly what happened during the Great Recession of 2007 to 2009. And by the way, can we stop calling it the Great Recession? It's a little bit dramatic.

I mean, yeah, it was a rough time, don't get me wrong, but nobody was dying on the Oregon Trail from dysentery here, all right? It wasn't quite great depression level. I mean, in 2007, the iPhone had just released, Rihanna just dropped umbrella. we had it pretty good, all things considered. Woe is you. Now, you might be thinking, well, George, I've seen some bubbles. Well, those are many bubbles.

You're talking NFTs and meme stocks, not things that are actually affecting the overall economy. So, are we in a recession? Well, at the time of this recording, GDP has declined two quarters, but NBER has not declared a recession. So technically, no. But their declaration can lag several months behind when the economy is actually in a recession. So let's cover this question. Are we headed there? Let's take a look at some of the warning signs.

Sign number one, negative GDP growth. This would mean businesses are making less, people are spending less, and the overall engine of the economy is slowing down. According to recent data from the U.S. Bureau of Economic Analysis, GDP increased at an annual rate of 2.4% in the fourth quarter of 2024. So we're good here. It's going up a little bit. Sign number two is rising unemployment.

If companies are laying off workers or freezing hiring, that's a warning sign. Because if people are out of work, spend it. spending less and struggling to cover their bills, that's likely going to make the economy slow down even more. And according to a recent jobs report from the Bureau of Labor Statistics, the unemployment rate for March of 2025 was 4.2%, which is up a teeny tiny bit from the previous month's rate, a 4.1%. Now, that's not a lot, but it has been increasing since January, so it's not a surefire indicator, but it's something to consider and to keep watching.

Sign number three, consumer spending drops. When people stop spending money, businesses stop growing. It's that simple. And recently, consumer spending has increased, but at a slower pace. Sign number four, credit tightens. If banks tighten lending, which means higher interest rates, stricter approvals, that slows down spending on big things like homes, cars, and business investments. And that can drag down the economy even further.

Now, we all know interest rates are higher than most of us would like them to be right now. And according to the Fed, senior loan officers have recently reported tighter lending standards for commercial and industrial loans. So yes, this one has been happening lately. Sign number five, the old inverted yield curve. Now, this one's a bit complicated, but here's the Cliff Notes version. A yield curve shows the interest rates on government bonds. Now, normally, long-term bonds pay more than short-term ones.

But if short-term ones pay more, that's called an inverted yield curve. And it has predicted every U.S. recession since the 1950s. It basically means investors are nervous about the near future. So it's time to play everyone's favorite game is it inverted. All right, let's check my favorite website to figure. this out. Is the yield curve inverted? Today. No, that's, I'm literally telling you the website. Here we go. No. No inversion. That's a good sign. But you still need to look at the full picture

to see if it was inverted recently along with other factors. But I'll take the win for now. This is a rare time. We're to know is a good thing. Hey, editors, get a good look at the curve on that yield. Okay, here we go. Key rates. Here's the key rates. 4.17 on the 10-year treasury, 3.6 on the two-year. So if the 10-year is higher, good. If the 2-year is higher, bad. I should be teaching this at a college level. That's what I'm realizing.

Oh, I love a good yield. Look at that yield. Look at the curve on that. Hey! It's just getting weird. Sign number six is stock market volatility. Wild swings or long-term downward trends usually mean investors are nervous about the future.

And when confidence drops, people pull back, which can turn fear, into reality. And as of this recording, the last month in the stock market has seen sharp swings and continued declines. Clear signs that investor confidence is shaky right now. So, are we headed into a full-blown recession this year? My Magic 8 Ball says, ask again later. The truth is, we just don't know. But it's smart to be prepared either way. Because a recession is like a Fast and Furious movie. The question is not if another one's coming, it is when. And I'm not saying that to scare you guys. I'm saying that because Fast and Furious 11 is already slated to release in 2026.

Not again. And because recessions are a normal part of the economy, and they're temporary. Unlike Fast and Furious, which will always be with us. It's like an STD, or in this case, an STVD. Shout out to my man. Vin, most unhinged name. Is that his real name? Or is it Vincent?

Is it Vincent Diesel? I've got to Google this. Vin Diesel, full name. Oh, you guys are going to be so disappointed. That guy's name is Mark. Mark Sing. Claire. Wow, it sounds like he should be making dark chocolate. I'll kill you with my teacup.

All right, back to recession stuff. We've actually had 13 recessions since World War II, and the average length of each was about 10 months. So hopefully you can see that there's no need to break out into hives or start hoarding cans of Spaghettios whenever you hear the word recession on the news. But you do need a plan, and I don't mean buying gold bars or turning your garage into a doomsday bunker. I'm talking about a legitimate plan for your money that helps You stay calm, smart, and financially bulletproof whenever a recession does come knocking. To make that happen, you'll need to take five important steps, and we'll cover them in just a second. Before I break down how to protect yourself from a recession, let me tell you how I protect myself from shady data broker's sites selling my personal information.

And that's by using Delete Me, the sponsor of today's video. Look, if your personal data falls into the wrong hands, you could get targeted by fishing scams, online harassment, or even stalkers. And Delete Me helps protect you from that stuff by combing through hundreds of sites to clean up your digital footprint. They'll even send you a report every few months, letting you know how much time they've saved you and where they've removed your information. And right now, you can get 20% off their annual plans, which comes out to just $9 a month. So to get that deal, go to join deleteme.com slash George or click the link in the description below. Okay, here's the plan to recession proof your money. Step one, ditch your debt. Debt is not your friend. It's the roommate who steals your

food, never pays rent, and leaves mysterious stains on your couch. That better be dark chocolate, Mark. If that's milk chocolate, we've got problems. You know I have issues with dairy. He knows I'm lactose intolerant. He's tons to me. And when times get tough, debt becomes a financial landmine just waiting to blow up your budget.

But when you get rid of your debt, you'll have fewer payments to worry about and more money in your pocket, both of which come in handy during a recession. And things like higher food prices or a dip in the stock market don't hurt as much when you aren't spending most of your paycheck

on debt payments. So start knocking out your debts one at a time using the debt snowball method. This is where you list your debts out from smallest to largest and pay minimums on everything except for that smallest one. That smallest one, attack it with a vengeance until it's gone and you freed up that payment. Now you freed up that payment plus all the extra money and attack

the next one. So you rinse and repeat this until you're totally debt free. Step number two, get on a budget. Without a budget, your money is just aimlessly wandering the streets like a toddler with an ice cream cone in the middle of July. It's going to get messy. So download my favorite budgeting app called Every Dollar and start making a plan for your money today. It's free, it's easy, and it will put you in control of your money instead of just chaos when it comes to your finances. I'll put the link in the description below or you can go to every dollar.com slash George to get started.

Step number three, build an emergency fund. This is where the true magic happens because you'll finally be building for your future instead of paying for your past. And that starts with saving three to six months of expenses once you're out of debt. This emergency fund is like a storm shelter for your money. It's going to give you cushion

for whenever life throws you a recession, a job loss, or a busted transmission. And no, this is not for emergency. fund, it's got to be urgent, unexpected, and necessary. So no matter how tempting it may be, don't use your emergency fund for a Black Friday sale, a surprise brunch, or a spontaneous girls trip. We're talking real emergencies here like your HVAC giving up in July or your kid deciding to test gravity with their arm. Step number four, leave your investments alone. No touching. Now listen, I get it. When the market tanks, it can feel like your 401K has turned into a 201K.

But that's why you need to invest with a long-term mindset and avoid trying to time the market. When you're playing the long game, a market downtick is not a crisis. It's an opportunity. That's when mutual funds go on sale, and we love a discount. Plus, even if it takes a while, the stock market always rebounds from dips and dives, and there's over 100 years of history to prove it. So don't pull your money out of the market. Remember this line.

Time in the market beats timing the market. So be boring, be patient, stay consistent. That is your key to being wealthy down the road. Step number five, reevaluate your job situation. Look at your job and ask, is this state? And while no job is 100% recession-proof, it does help if you're working in an industry that fills an essential need and won't be affected by how good or bad the economy is doing. For example, regardless of how the economy is doing, people need to buy food. So, people working in grocery stores have solid job security.

Same goes for teachers, repair techs, public safety professionals, medical professionals, and funeral homes. People may skip the guac during a recession, but they're still going to be born and they're still going to croak. Circle a life, baby. Wow, that's really deep. So if you are working in a job that could be affected by a recession, it's not a bad idea to start growing your skills and exploring your options in case you need to make a job transition. Don't wait until after your boss invites you to a mysterious 15-minute quick connect with no agenda. Spoiler, he's not asking you to test out his new dark chocolates. Okay, you're probably getting laid off, bud.

Okay, so that covers what you should do to prepare for a recession. But there are also some things you shouldn't do. For starters, do not panic. Fear is a terrible financial advisor, and it never leads to good decisions. mostly just 2am Amazon orders that you'll regret before they even get to your house. Next, don't rack up extra debt. That's not a plan. It's a trap. Stay out of it. Don't get more of it.

Then, don't stop investing out of fear. Okay, long-term gains always beat short-term stress. Stay with it. And finally, don't believe every headline. The news only cares about clicks and views. It's about panic, not peace. And please, for the love, don't hoard toilet paper. Okay?

A recession may make your money tighter. It's not going to spontaneously give you IBS. And if you do have money-related guns, issues, consider this your sign to take a daily probiotic. Now here's the bottom line. The economy might dip, tank, or do the cha-cha slide. But if you've got a plan, you're not going to go down with it. And you're not doing the cha-cha.

We're done with the cha-cha slide. No more cha-cha slide. Don't try it, wedding, DJ. It's not going to get people on the dance floor, all right? Two hops is time. Bam-Bow! That's the best part of that song, is just that sound effect where it goes, Bound, bow!

If you're sitting there thinking, where do I even start? Well, you can take our free assessment to get a custom next step based on your money situation. I'll drop the link to that in the description below. And if debt is the biggest obstacle standing between you and being prepared for a recession, keep watching to see this video where I break down the best way to pay off your debt once and for all. You can also use the link in the description to check it out. That's all for today. Thank you guys for watching. We'll see you next time.