During the midst of the COVID lockdown in May 2020, I interviewed Entrepreneur and investor J Scott. J Scott is the host of the bigger pockets business podcast and the author of the book Recession Proof Real Estate Investing.
In this interview, we discuss how the many ways the COVID lockdown would impact the real estate industry overall and more specifically commercial real estate.
The economy is and always has been cyclical. Over the last 160 years, there have been 33 recessions. On average, that’s a recession approximately every 5 years. At the time of this interview, we were currently in the midst of an 11 year cycle without a recession. As of today, that cycle now stands at around ~13 years.
Before the COVID pandemic there were a number of economic indicators that suggested a recession may be around the corner. [ Here we could show a graph showing Inflation / GDP pre covid. Anything to support the point.]
In economics, a recession is defined as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
Now if we look at GDP and the economy since this interview, we can see that we actually technically avoided a recession in large part due to the government stimulus package that was enacted during the COVID pandemic.
Now, almost two years since the initial lockdown, we need to evaluate if we truly have avoided a recession or if we have simply kicked the can down the road.
One thing that I have wondered is that If people have the potential to borrow more as currency is being devalued, is that really a recipe for success for long term economic solvency?
In the interview from 2020, which is still very relevant, J Scott and I discuss why understanding the difference between good and bad debt is very important.
Hard assets tend to rise during inflation (Ex: the housing market) , this is a good long term indicator for the economy. Listen in to hear more!