Episode 104

A Brief History of Recessions in the United States

Published on: 3rd August, 2022

A rising number of financial experts say the US is headed into a recession. By looking at the history of recessions in the United States what we learn is that they are a natural, yet unpleasant and sometimes painful, part of the business cycle. 

Listen in as I take us through a brief history of the 12 recessions in the 20th century and the three to date in the 21st century; what caused them and how long each lasted.

Drink of the Week:  Depression Glass Cocktail

Julie Brown:

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Transcript
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A rising number of financial experts say the United States

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is heading into a recession.

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By definition, a recession is two sequential quarters with a significant

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pervasive decline in economic activity.

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There have been 11 recessions in the United States since 1948.

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averaging out to about one recession every six years.

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Welcome to episode 1 0 4 of this shit works a podcast dedicated to all things

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networking business development and relationship building i am your host

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julie brown and today i'm giving a brief history of recessions in the united states

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This episode is sponsored by nickerson A full service branding marketing pr and

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communications agency With team members in boston los angeles miami and new york

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city Visit them At nickerson c o s.com.

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Recessions are typically marked by widespread layoffs.

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Bankruptcies.

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Higher borrowing costs and turbulence in the stock market.

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That was last two.

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We've already started to experience those with soaring inflation and the

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stock market experiencing its worst.

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First half of the year since 1970.

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What we learn by looking at the history of recessions in the United

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States is that they are a natural yet unpleasant and sometimes

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painful part of the business cycle.

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According to the balance.com.

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There were 12 recessions in the 20th century.

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The great depression was technically two of the nation's

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worst recessions back to back.

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Let's take a look at each one, its causes and how long it lasted.

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Again, this data is all gathered almost verbatim from the balanced.com.

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I will include a link to the article in the show notes.

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Should you want to look at it more fully after listening to this podcast.

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The panic of 1907 lasted from May, 1907 to June, 1908.

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It was caused by speculators losses that spread to trust companies.

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These firms acted like banks, but had lower reserves.

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Congress created the federal reserve system to , prevent future collapses.

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After this panic.

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1929 to 1938, the great depression, the biggest economic crisis in us history

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was two closely related recessions.

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That first downturn was from August, 1929.

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To March, 1933 with a record 12.9% contraction in 1932.

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The second downturn lasted from May, 1937 to June, 1938.

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Unemployment reached 24.9% in 1933 and remained in the double

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digits until world war II began.

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Several factors combined create the great depression.

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The fed raised interest rates in the spring of 1928 and

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continued despite the recession.

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The 1929 stock market crash destroyed businesses and life savings.

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A 10-year drought in the Midwest created the dust bowl that devastated farmers.

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The new deal ended.

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The first recession boosting growth by 10.8%.

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The second recession ended when the drought did and the government

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increased spending for world war two.

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In 1945, we had an recession that lasted eight months from February to October.

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It was a natural result of the demobilization from world war two.

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We had an 11 month recession, which began in November of 1948

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and lasted until October of 1949.

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When unemployment peaked at 7.9%.

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It was caused by the feds raising interest rates too quickly.

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Only four years later, the recession of 1953 lasted 10 months

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from July, 1953 to May, 1954.

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It resulted from tightened monetary policy, following the Korean war.

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Although with this recession, unemployment didn't reach its peak

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of 6.1% until September of 19 54, 4 months after the recession ended.

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Again, Only four years later in 1957, there was another recession which took

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place from August, 1957 to April, 1958.

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GDP fell 4.1% in Q4, 1957, then contracted to a low of 10% in Q1 of 1958.

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Unemployment didn't reach its peak of 7.5% until July, 1958.

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The Fed's contradictory monetary policy caused this economic slowdown.

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Three years later in 1960, there was another recession

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that lasted for 10 months from April, 1960 until February, 1961.

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Unemployment reach to Pico 7.1% in may of 19 61.

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President John F.

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Kennedy is credited with ending the 1960 recession with stimulus spending.

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His opponent, Richard Nixon, blame the recession for costing him the election.

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Uh, in 1970, there was a relatively mild recession lasting 11 months from

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December, 1969 to November, 1970.

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Unemployment peaked at 6.1% in December, 1970.

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The next recession lasted 16 months from November, 1973 to March, 1975.

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The OPEC oil embargo is blamed for quadrupling oil prices.

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Sound familiar.

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But actions taken by president Richard Nixon also contributed to the recession.

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First Nixon instituted wage price controls.

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They kept prices too high, reducing demand.

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Wage controls made salaries to high enforced businesses to lay off workers.

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Second.

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Nixon took the United States off the gold standard in response to a run on the gold.

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How that Fort Knox, which led to inflation the price of gold skyrocketed

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while the dollars value plummeted.

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The result was stagflation and five quarters of negative GDP growth.

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Unemployment reached a peak of 9% in may, 19 75, 2 months after the recession ended.

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The next recession from 1980 to 82.

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Saw the U S economy suffering from back to back recessions in this period.

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There was one, during the first six months of 1980, the second lasted 16

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months from July, 1981 to November, 1982.

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The fed caused this recession by raising interest rates to combat inflation.

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Again, some familiar.

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The increased interest rates, reduced business spending the Iranian oil embargo,

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aggravated economic conditions by reducing us oil supplies, which drove up prices.

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I once heard a saying that history doesn't repeat, but it certainly does rhyme.

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Seems a little fitting here.

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Don't you think?

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During this time, GDP was negative for six of the 12 quarters.

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The worst was Q2 1980 with 8% unemployment.

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Which rose to 10.8% in November and in December, 1982, it

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was above 10% for 10 months.

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1990 to 1991.

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This recession ran for nine months from July, 1990 to March, 1991.

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It was caused by the 1989 savings and loan crisis, higher interest rates

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and interacts invasion of Kuwait.

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Now onto the 21st century, once most of you will be familiar with.

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And its first decade, the 21st century experience three recessions.

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Each was worse than the one before it, but for different reasons.

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The 2001 recession lasted eight months from March to November.

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It was caused by a boom and subsequent bust in.com businesses.

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The Y2K scare had partially created the boom in 2000 companies, but billions of

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dollars worth of new software, because they were afraid the old systems

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weren't designed to transition from the 19 hundreds to, to the two thousands.

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many.com businesses were significantly overvalued and then failed.

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The nine 11 attack, worse into this recession, the economy contracted.

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Acted in two quarters clue one by 1.3% in Q3 by 1.6%.

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Unemployment continued rising until it's peak at 6.3% in June 2003.

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Now onto the great recession, which I'm assuming most of you remember vividly.

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The great recession lasted from December, 2007 to June, 2009.

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The longest contraction since the great depression.

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The subprime mortgage crisis triggered a global bank credit crisis in 2007.

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By 2008, the damage has spread to the general economy through the

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widespread use of derivatives.

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For definition, a derivative is an arrangement or instrument such as a

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future option or warrant who's valued.

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Drives from an is dependent on the value of an underlying asset.

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GDP in 2008, shrank in three quarters, including an 8.5% drop in Q4.

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The unemployment rate rose to 10% in October, 2009, lagging behind the

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recession that caused it, which if you haven't noticed is a theme here.

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Mostly the unemployment lags behind the recessions.

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The great recession ended in Q3 2009 when GDP turned positive.

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Thanks to the American recovery and reinvestment act.

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Now to our most recent one, the 2020 recession was the worst

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since the great depression.

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The us economy contracted 31.2% in the second quarter of 2020 after falling.

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5.1% in the previous quarter.

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In April, 2020, the U S economy lost in astonishing 20.5 million jobs.

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Sending the unemployment rates, skyrocketing to 14.7%.

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It remained in double digits until August, 2020.

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Uncertainty over the pan dynamics impact also caused the 2020 stock market crash.

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The federal reserve lowered the Fed's funds rate to 0% promising

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to keep it there until 2023.

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Congress issued billions of dollars in aid.

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Although the economy grew 33.8% and the third quarter, it was not enough to

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make up for earlier losses in the year.

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Which brings us to today.

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According to Farnoosh Torabi have so money.

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Technically the country is in a recession when gross domestic product,

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the value of all goods and services produced during a specific period

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falls during two quarters back to back.

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And the first three months of 2022, the U S GDP dropped by 1.4%.

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Additionally, according to Turabi, there's also concern that the central

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bank and an aggressive effort to team inflation by slowing down the

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economy could just be forcing the economy into a painful recession.

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As I said in the beginning of this podcast, Looking at the history of

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recessions in the United States, we can see that they are natural

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again, not unpleasant and yes, usually very painful, but they are

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part of a normal business cycle.

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So, what can we do to prepare for the potential 20 22 20 23 recession.

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Or any of the ones we may face father down the road in our careers.

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Well, Tune into episodes, 1 0 6 and 1 0 8, 2 weeks and four weeks from

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now where I offer financial and networking tips to help prepare for

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downturns in the next business cycle.

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Okay.

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After all this recession.

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We definitely need a cocktail.

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This week's cocktail is called the depression glass.

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No, I know depression classes, not because of the depression.

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I get it, but whatever.

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I was looking for a thread here and I found one.

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It has a ton of shit in it that I love, including elderflower in ginger.

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So yay.

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This is what you're going to need.

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One ounce of gin, one ounce of light rum.

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One ounce of St.

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Germain or elderflower cordial, one ounce of ginger liquor, one ounce of triple sec,

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one and a half ounces of fresh lemon juice and one and a half ounces of tonic water.

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You're going to mix all ingredients and it highball glass filled

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with ice stir and garnish with a lemon witch, and then enjoy.

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All right friends, that's it for this week.

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Don't forget to tune into my next two solo episodes in two weeks and four weeks

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for your financial and networking tips.

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To help prepare for the upcoming downturns in the economy.

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Thanks so much for being here.

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This was a lot, you know, it was a lot of information and maybe a little depressing.

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No pun intended, but whatever the future has in store for us, we're

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going to get through it together.

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Until next week.

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This Shit Works
The people you meet can 100% Change Your Life! Networking is how you meet those people. Which sucks because you hate networking, you think you're bad at networking, and you certainly don’t have time to network. Bullshit! Welcome to This Shit Works, a weekly podcast hosted by entrepreneur, CEO, public speaker, author, business development strategist and networking coach Julie Brown. Just don’t call her Downtown Julie Brown - she doesn’t like that.

Each week Julie will bring to you her no nonsense tips, tricks and conversations around networking your way to more friends, more adventures and way more success!
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