Editor's note: Fear is gripping the markets...

High inflation and interest rates continue stoking recession fears. Stansberry's Credit Opportunities editor Mike DiBiase believes we've already entered a major downturn. But that doesn't mean there won't be opportunities to profit...

In today's Masters Series, originally from the March issue of Stansberry's Credit Opportunities, Mike shares the signs that show the recession has already arrived... and explains why it's critical to start preparing now.

The Recession Has Arrived

By Mike DiBiase, editor, Stansberry's Credit Opportunities

After nine months... 500 applications... and six interviews... Josh McLarty's best job hope was his local Publix supermarket.

The 42-year-old was a testing manager with a robotics startup. After being laid off in April 2024, he told the Wall Street Journal that he had received zero interest on his hundreds of applications.

So he took the advice of his friends and family and applied for a lower-paying position at Publix... only to be rejected there, too.

As an overqualified white-collar worker, hourly employers assume he isn't in it for the long haul. They don't want to waste time and resources training someone they assume will leave for a better job.

The silver lining is that McLarty remains eligible for Medicaid and food stamps. If he had taken on the smaller paycheck from Publix, he'd no longer qualify for this aid... while still not being able to pay his mortgage.

As he put it to the Wall Street Journal, "You're in this really weird Catch-22."

McLarty is far from alone. Tons of folks these days are having trouble finding work and making ends meet.

Thanks to years of stubbornly high inflation and interest rates, even Americans with jobs are struggling to pay for basic necessities. They've seen prices for consumer staples soar.

Everyone has heard about the price of eggs, which have nearly tripled since inflation started taking off in 2021. But utility prices are up 45%. Milk is up 20%. Chicken is up 30% and ground beef costs 40% more.

President Donald Trump's plans for higher tariffs mean even higher prices for many other goods.

A record number of folks are having to work at least two jobs just to survive. S&P reported that 8.9 million Americans now work more than one job, the most ever.

Dollar General (DG) CEO Todd Vasos said on the discount retailer's fourth-quarter earnings call that consumers are even having trouble affording basic necessities.

When folks can no longer afford the essentials, the economy is in trouble.

Walmart (WMT) is seeing customers struggle, too. CEO Doug McMillon is seeing its customers run out of money before the end of the month.

Folks are worried...

In February, consumer confidence fell at the fastest pace in three and a half years – as measured by the Conference Board's Consumer Confidence Index.

Up to this point, the economy has been propped up by the top 10% of earners – households making $250,000 or more a year. These earners now account for nearly 50% of all spending in the U.S. That's up from around 36% three decades ago.

For these lucky folks, "inflation" also meant huge gains in their stock and real estate holdings. They've been splurging on everything from vacations to designer handbags.

But inflation has made everyone else poorer. An economy overly dependent on the wealthy is not healthy. It's a house of cards.

And any big stock market sell-off or plunge in home values will shake the confidence of the rich. That will cause them to cut back on spending... just like the rest of Americans.

We're already starting to see this happen...

Before Trump paused his broad, massive tariff increases, the S&P 500 Index plunged 19%. The tech-heavy Nasdaq Composite Index collapsed 24%.

Housing prices are starting to fall in many counties across the U.S.

Even higher-income shoppers are cutting back...

Costco Wholesale (COST) is seeing customers be "very choiceful where they're spending their dollars," according to its chief financial officer.

People are being "choiceful" when thinking of spending $7 on their favorite Frappuccino, too...

Starbucks' same-store sales have now fallen five straight quarters. The only two other times the company has suffered a slump like this were during the 2008 financial crisis and following the pandemic... both coinciding with recessions.

Considering consumers make up around 70% of the economy, the picture is bleak. Consumer sentiment is plunging. That can lead to a downward spiral.

Of course, it's not just consumers who are hurting.

High inflation and interest rates continue to cripple many debt-laden businesses...

In the first quarter, 188 U.S. companies went bankrupt. That's the highest number since 2010. Expect that number to pick up in the quarters ahead.

The U.S. GDP fell in the first quarter, marking the first contraction since first-quarter 2022.

Remember, a recession is two consecutive quarters of falling GDP.  No one wants to acknowledge it, but I will... We're in a recession.

Keep in mind, the stock market has fallen by an average of 37% over the past five recessions.

Most analysts are still asleep. Economists at JPMorgan Chase are forecasting only a 30% chance of a recession in the next 12 months.

The corporate-bond market is even more clueless...

The high-yield spread − the difference between the average yield of high-yield corporate bonds and similar-duration "risk free" U.S. Treasury bonds − is around 320 basis points ("bps"). That's far below its long-term average of around 550 bps.

Today's low spread means bonds are far more expensive than they should be given their level of risk.

I urge you to be cautious, despite investors' apathy today. Fear can grip the market fast. The next credit crisis is near. Corporate-bond prices can plunge fast... And when that happens, it will create some of the best investing opportunities of the next decade.

Good investing,

Mike DiBiase

Editor's note: You don't need to panic about this recession. According to Mike, there's a simple way to earn legally protected income from investments that are much safer than stocks amid this market chaos.

In fact, one of his subscribers used this strategy to retire at 52 years old. Despite the storm clouds hanging over the economy, Mike says employing this approach today could lead to the best moneymaking opportunity of your lifetime. All you have to do is be ready... So click here to learn how you can prepare.