Recession CONFIRMED by Banks. Housing Next

Many banks are signaling a large recession risk warning. Not only are the CEOs coming out in mass and basically saying, "Look, we have a problem here," but hedge fund owners and other people, and if you're a real person in today's economy looking for a job, you know that there we are already feeling a recession and we're already in one. Let's dig into what the experts are saying, how this can impact housing and your pocketbook at the end of the day. So number one is that UBS came out with this stark warning of 93% of a recession in 2025.

UBS said the signal has hit historically worrying levels pointing out its track record of identifying recession points in the past. The big red flag right now is the inverted yield curve. Right? So the short-term curve is actually higher than the long-term curve, which means that there's more expectation of risk on the short term than there is on the long term.

Indicates that we're going into some sort of recessionary or pain period in the economy and it is currently 23% inverted and it's been steady for months but it's sharply higher right now than it was in early 2025. Historically an inverted yield curve is what people say is the best predictor for uh recessions in the future. UBS also highlighted stress in the credit markets which will get into tririccolor saying recession probability from credit metrics have jumped to 41% almost double what we saw in January as reported by Fortune. So there's more risk under the surface.

So even though Bitcoin and all these other assets continue to hit all-time highs including the stock market almost every single day. We've been up like 38% since uh March of 2025 which is insane since we had the tariff situation going on. It has rebounded drastically to the point of feeling like we are in a complete bubble not only in the housing market but also in the stock market. So the UBS uh clarifies itself despite the risk signal UBS is not officially predicting a recession in instead it expects soggy growth in 2025 with improvement potentially in 2026.

UBS averaged all its signals, their hard data, their yield curve, evened credit stress to get a 52% overall recession probability in July, up from 37% in January. So this is obviously linked with the recessions in history and UBS warned that the economy is at stall speed especially after the July's report showing very weak hiring raising doubts about stability. Other experts agree from Moody Analytics warned in August that the US is on the edge of a recession, citing weak jobs data and downward revisions similar to past recessions. If you're a person that hasn't already purchased a house, you don't own a lot of assets and you're kind of being left behind by all these rising assets and your wages are basically stagnant, you are already in a recession.

It's just hasn't been a technical term that's come out yet. And the hiring situation continues to deteriorate every single month. Look at this. Another Goldman Sachs CEO says that there's going to be a significant draw down in assets the next 12 to 24 months.

David Solomon warns of a stock market draw down. People won't feel good. Well, people already don't feel good. Maybe not the people that um Solomon spends time with, but the average person is already struggling very drastically loaded up with consumer debt and their expenses continue to get higher every single month.

Goldman Sachs CEO David Solomon said, "AI presented opportunities, but investors were overlooking things that you should be skeptical about, such as they're spending so much money on this. Obviously, there's not going to be everybody's going to be a winner. It's actually going to be a bunch of losers in this space. Maybe five or six winners that'll come through and the rest of them will be spending this money and probably go to zero or near zero or be acquired." So, he said a draw down was likely to hit the stock market in the next two years.

I think there'll be a lot of capital that's deployed that will turn into not deliver results at all is what he said. Meanwhile, we have Ray Dallio who's the founder of Bridgewwater Associates, one of the largest hedge funds. He's one of the best investors that we know of, including Warren Buffett. He says that he's afraid that the economic agenda of trying to outgrow our national debt and just push money assets all the way up as possibly as possible is going to turn into something worse than a recession is coming coming.

Now right now we at a decision making point and is very close to recession said Dalio and I'm worried about something worse than a recession if if the situation is not handled well. Of course, we are in now a government shutdown and that obviously is going to impact some things, but a lot of people analysts say that the government shutdown doesn't impact a lot at all and it's mostly the main economy and the consumer that's most important. But again, we can look at the data and show that the consumer is really struggling right now. An indicator that came out just a couple weeks ago was Triricolor, which is a lender, basically a subprime lender for cars, where they double pledged collateral to to get multiple loans.

So they pledged collateral to get two or three loans on the same car. And this is showing up. This shows that like 40% of the cars that banks were giving them to were double pledged to multiple banks and now they're able to run their VIN numbers to verify that. And this bankruptcy is a huge problem for banks like JP Morgan that held a lot of these assets.

So now this is all going to work its way through the system. But I can tell you during the boom years 2020 to 2022, there were there's probably going to be a lot more fraud cases because money was just being thrown around everywhere. People incentivized to take advantage of the low credit terms and there wasn't a lot of diligence done on deals. So, I think there will be a lot more fraud type of issues that will pop up in the in the news over the next couple of years as the market starts to come down.

Again, as Warren Buffett says, we're going to start seeing people swim naked and this is just an indication of that. And of course, hiring is falling. We saw that jobs report come out that revised jobs down 900,000. One of the largest revisions ever in history.

But you can also see it on Indeed, right? Job postings are moderating after falling off past their peak. So, we're coming right back down and we can tell that the unemployment rate for young people is really starting to move upwards and it's really hard to get a good paying solid job right now if you're a young person. A lot of people are replaced with AI technology.

I know a lot of there's a lot of arguments about there. I'd love to hear from you. Do you think that young people are getting replaced with AI? I know for sure in our business, we're using AI and virtual assistants to save costs wherever we possibly can because it's expensive.

Just the employment taxes for it to hire somebody is, you know, 15.3 of the percent of of their money. And of course, half of that is paid for by the employer. But you can see there's incentives to hire people that you won't have to basically do that except have a consulting agreement with. And maybe you just pay people for one-off gig economy jobs rather than hiring somebody for full-time.

I can tell you I use chat GPT every day for legal and doctor questions. Uh, and then I use that information to verify with my doctor and it or my attorney and it makes things move so much faster. It saves a ton of time and what you need to spend for those type of fees. And I think that's the way that AI is going to work through the system.

This all impacts real estate because obviously if people don't have strong paying jobs right now, you need to have two incomes of about $60,000 each to even have a chance to purchase a house in today's marketplace. So obviously if you're not employed or you're just doing gig type of work, it's going to be a lot harder to qualify for a loan as the next generation. And honestly, we are in a financial crisis. I mean, this is the federal debt, total public debt.

As you can see, it's starting to basically follow that curve and go exponential. And due to the laws of compounding, it's going to get worse every single year. We're kind of past the point of no return. Without touching social security or the defense budget, there's no chance that we're going to be able to turn this around anytime soon.

And the government doesn't have the will to be able to look at those type of assets and and make some changes. So, we're likely going to just see and and Trump has said we're just going to continue to grow the economy and move it as hard as we possibly can. So, we will continue to see our government debt spiral upwards. And this will add a ton of money to the money supply as they continue to borrow and make these payments.

And and continue to have this deficit. And then the government, the Federal Reserve on that side, they're just going to lower interest rates and try to keep the economy going for as long as humanly possible until it basically crashes and corrects or has some sort of stress in the market that'll blow it all up. That is what Ray Dallio is predicting. He's thinking there's going to be some sort of fracture in the bond market.

That's where yields are going to spike and then obviously the stocks will start falling because of that elevated risk and we're going to be headed towards some sort of financial crisis in the next three years because where the stock market and where assets are going are signaling that we are in a bubble and that's obviously what gold is doing as well as moving up as a as a fear gauge and people are throwing their money into gold. They're throwing their money into Bitcoin. Obviously with the government shutdown uh Bitcoin is being viewed as the alternative. If we see it up 10% just in the last week here.

And for the housing aspect of it, you know, it's going to get a lot worse unless prices come down. I don't think we need to have rates come down. I actually think that rates would be around 10, 11, 12% if we didn't have government intervention. And that would be a good thing because prices would be affordable at that point uh to the next generation of home buyers from a price standpoint.

Not from a payment standpoint, but from a price standpoint. And that would make it uh better for them long term to be able to get in on this market, save for their down payments, and get in. But the affordability is worse than the great financial crisis when you look at the home price to the median household income ratio. So look at this ratio right here.

We're worse than the great financial crisis. And we're going to continue to probably be here for some period of time. Real estate, as you know, takes time to come down in price. It will take 3 to four years.

It'll just go every single month. A little bit more inventory, a little bit more inventory, a little bit more of a decline in price for years until it gets to a sustainable level. And I think that we could be seeing up to a 30% drop from here in a lot of the markets, especially the south where they just overbuilt, have ton of supply, ton of inventory coming through. And the consumers just don't make enough money to be able to afford the payments for a lot of the houses.

So we do need to see these prices come down and we are definitely in a housing bubble and I do believe that we are in a stock bubble as well but as we know from bubbles they can last a very long time and they tend to go exponential at the end. I think that's the case for the stock market and I think the real estate market is already correcting and of course this affordability crisis is causing the lowest record of home buyer demand for since the great financial crisis. I mean, if you can look at this for existing home sales versus 2009, we're basically equivalent with the number of sales from, you know, one of the worst time periods that we had in history for real estate, but our population is about 20% larger. So, we are hurting right now on the real estate side from the number of transactions that are coming through.

And this is simply because, you know, it's not affordable anymore. You can actually rent for less than you can buy in a lot of circumstances. And it doesn't make sense to go out there and buy a house right now when you think that prices are going to move down the next year and we're going to see some sort of stagflation move into the economy uh now and in in into the future. The affordability is so bad and I feel so bad for young people because they're spending 40% of their mortgage of their income on their mortgage and on housing.

This is really tough. I mean, you cannot save any money. If you're going to buy a house and you're going to pay 40% or you're going to rent a house and pay 40% of your income, it's really challenging to live on the remainder of that. You're obviously going to pay some towards taxes and then you need to fund your lifestyle somehow.

You also might have a car loan, you might have student loans, you're going to you might have credit card loans, all of these aspects that go into your life. So, it's tough. I'm going to be sharing some things that I would do if I were you uh and you were a young person today because I definitely do feel for you. And obviously this is driving the number of home sales down.

Affordability is the number one factor that impacts how many transactions actually go through every single year. And this chart is a really good chart that shows that. Now, the reality is that prices in Florida specifically are already coming down across the nation. We're about flat for the predictions for next year uh in terms of home price appreciation, but Florida is starting to come down.

We need to see it. We need to see prices come down further. Obviously, if you're a landlord and you're hearing that, you know, get with me. I can get you in touch with one of the top agents in your marketplace.

I'm happy to do that for you. And if you're a home buyer, this is great for you because it's going to loosen up the affordability and give you an opportunity to purchase. But you do want to wait for the right time. You don't want to fall, you know, catch a falling knife type of situation.

Now, here's the areas where we're seeing the now buyers markets right now. Oh, this is where I am. Number five, Jacksonville, Florida. But you can see Miami, Florida, Austin, Texas, Orlando, Florida, New York, included, Tampa, California.

So, you can start to see the month supply of inventory starting to spike up. That means you have more negotiating power. This is especially true if you're going to buy a condo or town home. But, please be very careful because we're just starting to see this pain and it takes time for the pain to run through the system until we get to a normalized level.

Other reports are coming out showing that Gen Z leads in the biggest drop of FICO scores since the financial crisis. So, we're seeing younger generations really strugg struggle financially with their credit. Um, and this I feel bad again for Gen Z. They're likely not going to have any pensions.

They're not going to have any social security and they're going to have big financial burdens and very few assets because they're not able to afford. If the majority of their money goes to shelter then they won't be able to afford you know the next you know to save or even purchase a house so it's definitely a problem in the bottom 50% is absolutely falling behind this is really interesting chart it shows distribution of US house house wealth the bottom 50% of households hold uh 2.5% of US wealth obviously the the top 1% is continuing to move up and the top 10% is definitely taking the biggest chunk so their assets are inflating and moving up while the bottom people who don't own that wealth are just continuing to move down so or stay low and that is a problem. We're starting to see a huge wealth divide. We're starting to see angst among uh young people about an unfair system.

And I think there is a lot of truth to it. I think there's also a lot of truth to young people not getting involved and just sitting on their phones and behind a computer and not actually going out there and taking any action. If they want to win, they need to get involved. Absolutely.

Uh but no matter how you cut it, the bottom 50% is falling behind and there's rising unemployment and the job openings are declining. So every modern recession has been preceded by rising unemployment and falling job openings. So you can see there on the blue line the job openings are starting to fall back to pre2020 levels and the uh the unemployment rate is starting to creep up and this comes from uh the BLS data. Layoffs are rising.

State layoffs per 100,000 workers in April 2025. You can see where a lot of the layoffs are and there'll continue to be more layoffs likely moving into the future as people are replaced with AI with automated systems or some sort of technology. I do believe that we will see that moving forward and it maybe will require one person to have two to three different jobs where they're kind of working as a gig worker rather than one stable job. Uh but time will tell.

I just am a little skeptical about the job market right now. Now, I think it's actually a lot worse than what the numbers are already showing. And the consumer is just so loaded up with debt. They've almost never been this indebted in history.

And, you know, it it's really sucks for them. And I think if you need help on this, you know, definitely comment below. We'd love to help you out. If there's anything we can do to look at your finances or um you know, talk about paths for you.

We are not financial adviserss at all or anything like that, but it's good to have conversations and I'll give you my few tips on what you can do if you're a young Gen Z and you have a bunch of debt and you're looking to to get out of it. I do have some ideas. So, number one thing is you need to reduce your spending to absolutely bare basic minimums. I can tell you this.

When I was 24 years old, I was living in my mom's basement and I was trying to spend less than 15% of my income on living expenses. And then the rest of it was to pay down my student loans, which I had about $84,000 in student loans. Every dollar I made that was above what I was spending each day went straight to my student loans payoff, which gives you just so much more financial freedom. I put every dollar I had after that to pay off my car.

And you know, I had a $7,000 car at the time, but I paid as much money as I could to get that down. After that, I continued, even though my income started going up, instead of just spending it all again, I decided to save that money and actually start investing it. I bought obviously real estate during a really fantastic time in 2014, 2016, and so on. And that really made my assets appreciate because of the good timing.

They were well underwritten. Real estate back then was cash flowing on a single family house, you know, $600, $700 a month. So, it was a no-brainer to put money into real estate at that time. It's no longer cash flowing, okay?

So, just want to be totally honest with you. Real estate right now is actually negative cash flow, $300 to $400 a month in a lot of circumstances, plus repairs. So, look, this is my formula that worked for me, and I'd love to see what works for you. But look, you got to reduce your debt.

You got to reduce that spending, please. Like, there's so much wasted money out there. Go through all your credit cards. Go through all your bank accounts and save as much money as you possibly can.

When it's the when you have enough in your savings, your six-month runway, start buying appreciating assets, even if you're just dollar cost averaging into index funds, just something where you're going to uh have a long-term growth so you don't get left behind like those other 50%. And so, let us know what you're doing to prepare, right? Because if all these guys are saying, hey, we're going into recession. What are you doing?

Are you buying gold? Are you buying Bitcoin? Are you uh buying protection for your portfolio? Are you just going to hunker down and stay in cash?

Love to hear from you and what you're doing. Like and comment and subscribe. As always, you can click below and look at the description and subscribe to my Substack. I talk about things there that I can't talk about on YouTube.

I'd love to hear what you're doing. Thanks so much for watching.