homeless people tent city usa Justin Sullivan/Getty Images

The Depth of the Next US Recession

Whatever the immediate trigger of the next US recession, the consequences are likely to be severe. With the US government committed to pro-cyclical fiscal, macro-prudential, and even monetary policies, the authorities are in a weak position to manage the next inevitable shock.

ASPEN, COLORADO – The United States economy is doing well. But the next recession – and there is always another recession – could be very bad.

The US Bureau of Economic Analysis estimates that GDP growth in the second quarter of 2018 reached 4.1% – the highest since the 4.9% seen under President Barack Obama in 2014. Another year of growth will match the record ten-year expansion of the 1990s. Add to that low unemployment, and things are looking good.

But this cannot continue forever. Given massive global corporate debt and a soaring US stock market – the cyclically adjusted price-to-earnings ratio is high by historical standards – one possible trigger for a downturn in the coming years is a negative shock that could send securities tumbling.

To continue reading, register now.

As a registered user, you can enjoy more PS content every month – for free.

Register

or

Subscribe now for unlimited access to everything PS has to offer.

https://prosyn.org/xaymOBU