It refers to a situation where different regions or sectors of an economy experience recessions at different times, with each recession starting and ending at different times. As once sector improves, the recession may “roll” to another sector of the economy.
In this scenario, the overall economy might not be in a continuous state of recession, but rather experience a series of smaller recessions that affect different regions or sectors at different times.
This can sometimes happen in a large and diverse economy where different regions or sectors have their own unique economic cycles and dependencies.
What kind of monetary policies can help this kind of recession? Here are some examples:
Interest rate cuts. Central banks can lower interest rates to encourage borrowing and spending, which can stimulate economic activity and help offset the effects of a recession. However, we know that the Federal Reserve is definitely NOT going to cut interest rates at this time. Interest rates have been historically low for more than a decade, and rate cuts or increases are the main levers for manipulating the economy.
Quantitative easing. Central banks can also use quantitative easing to inject more money into the economy, which can help to stimulate lending and spending. This probably won’t be used right now either, however.
QE is generally used as a last resort by central banks when traditional monetary policy tools are no longer effective. There are also risks associated with QE, such as the potential for asset bubbles or financial instability.
Fiscal stimulus. Governments can use fiscal policies such as increased public spending, tax cuts, or other measures to support economic growth and help offset the effects of a recession. This probably won’t happen right now either, because the US just saw the biggest economic stimulus in American history during the pandemic.
Targeted policies. Policymakers can also use targeted policies to support specific regions or sectors that are particularly hard hit by the recession, such as through targeted tax breaks, loan guarantees, or other measures.
If you thought we were in uncharted territory after the 2010 recession…we may be in another time where policy makers may not know what to do!
In any case, it’s a bad idea to rely on the US government policy to determine your financial future! Learn how to invest in real estate and get yourself on the road to financial stability regardless of what the economy is doing.
Real estate mentor and attorney Brian Gormley has created a three part masterclass to show you how to invest in real estate. It’s available now, on demand! Work at your own pace. Get started today!