Robert Kiyosaki, the author of the best-selling book “Rich Dad Poor Dad,” believes the U.S. economy is definitely in a state of depression.
What Happened: On Friday, Kiyosaki took to X, to express his view on the state of the U.S. economy. He stated that the economy was in a state of depression because it was experiencing subpar growth.
He wrote, “Q: Is the American economy in DEPRESSION? A: Yes Definition of a depression: an economy in subpar growth. In other words, the economy may be growing but below potential.”
Kiyosaki pointed out that the U.S. economy, which grew by 3.4% in the fourth quarter of 2023, only grew by 1.6% in the first quarter of 2024, less than half of the previous quarter’s growth.
He warned that this trend does not indicate a soft landing and urged people to seek the facts, prepare, and take care.
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Why It Matters: Kiyosaki’s warning, although technically incorrect, comes at a time when the U.S. economy is facing various challenges.
According to the Federal Reserve Bank of San Francisco, a depression is an extreme form of recession lasting three or more years or resulting in a GDP decline of at least 10% in a given year. Throughout its history, the U.S. has faced 34 recessions, including notable ones like the Great Recession of 2008-2009 and the COVID-19 recession of 2020. However, it has experienced only one depression, famously known as the Great Depression, spanning from 1929 to 1941.
Early 2022 had two consecutive quarters of negative GDP growth. That's the definition of a recession. However, the National Bureau of Economic Research declined to declare that there was a recession due to other technical indicators.
The Federal Reserve’s signals to maintain high interest rates have sparked concerns about its potential impact on the economy. Despite the ongoing economic stability, the Fed’s stance has raised questions about its potential impact on the economy.
Additionally, warning signs of a possible recession have been flagged by top economists. The Economic Cycle Research Institute’s leading economic index, known for its near-perfect track record, has been on a downward trend for the past year. Despite a recent leveling off, past patterns suggest that a dip in this index often precedes a recession.
Image by Gage Skidmore via Flickr
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