Anyone who was negatively affected by the recent recession will probably find the headline mentioned above one of the most alarming that they have seen in quite some time.
However, America’s economy has recently experienced a period of significant growth. Unemployment is at the lowest levels in over a decade and is predicted to continue falling. Pay rates are also on the rise in many states. This means that talented employees can pick and choose their jobs. The country may even break its record for the most prolonged period of continued economic prosperity if things don’t fall apart before the summer of 2019.
The Trump Card
President Trump’s tax breaks have probably helped the economy to some extent, but detractors argue that they weren’t necessary to boost the economy. In fact, the effects of these actions aren’t likely to last longer than the next two years. While they may have been a factor in some cases, the tax cuts haven’t significantly influenced business investments in that period. They may have also contributed to rising inflation rates.
On the other hand, the trade restrictions that President Trump has passed limiting or penalizing imports of aluminum and steel from various foreign countries could hurt the current economic situation. The nations that were affected have already vowed to retaliate in what could turn into a trade war if no one backs down.
The new jobs that have become available in recent years are tainted with some severe market problems that could cause them to evaporate into thin air quickly. Also, Americans may not be spending enough to keep the economy afloat. Many large retail brands are currently reporting weak growth if any.
The Federal Reserve is also scheduled to increase interest rates several times in the next year, which could devalue people’s assets and cause further economic problems. An article in the Wall Street Journal stated that many economists believe an "overheating economy is leading to Fed(real) tightening." which could cause the next recession.
There’s also the fact that economies tend to go through high and low periods every so often. America has been getting along so well of late that a recession seems somewhat inevitable soon. Ray Dalio, a businessman who successfully predicted the financial problems of 2007, thinks that conditions are indeed ripe for another recession.
In fact, economists are predicting that the next economic downturn could start as early as 2019 and will be a definite possibility by 2020. A minority have nonetheless suggested that the next recession may not show up until several years after that.
What To Expect
No one yet knows how bad this recession is going to be should it become a reality. The event could be quite mild and only last for a couple of years. However, according to some overly dramatic and possibly exaggerated reports, this downturn could be worse than the Great Depression of the 1930s. How bad things get may even depend on whether or not one falls into the upper or lower segment of society.
Of course, there might not even be a recession because these events are notoriously hard to predict or even recognize. This could be a case of people worrying over nothing, but for now, everything remains to be seen.
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