The Next Recession - What could Trigger it?

What Will Cause the Next Recession? A Look at the 3 Most Likely Possibilities

Excerpt:

The economic expansion in the United States celebrated its ninth birthday last month. If it survives another year, it will be the longest on record. But eventually something will kill it. The question is what, and when. While it’s impossible to predict the details or timing of the next recession with any confidence, we can identify some emerging threats to the expansion — and with a bit of imagination, picture how the recession of 2020 (or 2022, or whatever year it ends up being) may unfold.

1. The Fed: "The risk that the Fed will miscalibrate interest rate policy and cause a slowdown or a recession is rising, in part because of the timing of the tax cuts and spending increases enacted this year"
2. Debt: "Corporations have loaded up on debt over the last decade, spurred by low interest rates and the opportunity to increase returns for shareholders. The value of corporate bonds outstanding rose by $2.6 trillion in the United States between 2007 and 2017, according to data from the McKinsey Global Institute — rising to about 25 percent of G.D.P. from about 16 percent."
3. Trade War: "For the trade war to trigger a recession, then, it would need to escalate to a much larger scale than the limited tariffs on steel, aluminum, solar cells, washing machines and $34 billion in Chinese products currently covered. Even if it were to expand to encompass hundreds of billions of dollars worth of imports, as President Trump has threatened, in order to cause a recession it would need to prompt a broader crisis of confidence."

Comment: What else?

• Real war: China ... Iran ... North Korea ... Russia ... Middle East
• Political turmoil at home
• The national debt

Related:

Federal Reserve holds rates steady, says economy is strong https://t.co/JGtW47sUxW via @WSJ

— James Peet (@jrpeet) August 2, 2018

Real Time Economics: U.S. Ratchets Up Pressure On China; What to Watch in the July Jobs Report https://t.co/3GrOjGaeRv via @WSJ

— James Peet (@jrpeet) August 2, 2018

Answering the latest Trump administration tariff threats, Beijing suggests ‘the U.S. take the right attitude’ https://t.co/O1hfSBcptb via @WSJ

— James Peet (@jrpeet) August 2, 2018

U.S. Treasury plans increased auctions to fund looming trillion-dollar federal deficits https://t.co/qptFuU6hTk via @WSJ

— James Peet (@jrpeet) August 2, 2018

The Fed will keep on hiking rates until it has 'done damage' via @tdgraff https://t.co/wgZyn4Aa6g pic.twitter.com/yHGuiGlJKC

— Jim Cramer (@jimcramer) August 2, 2018

My money is on this one (below):

"Washington is responding to trillion-dollar deficits by increasing them further with more plans for tax cuts and spending, with nary a peep about how to pay for them." https://t.co/eGx5825FKK #fixthedebt

— Fix the Debt (@FixtheDebt) August 2, 2018