When Can We Expect the Next Financial Recession?
Currently, we are in a recession, a stark contrast to the economic boom that lasted for a decade during the current administration.
Current Economic Context
The booming period prior to the current presidency lasted for 10 years, making it likely that a recession would occur during the tenure of the current occupant of the Oval Office. Politically-motivated tax cuts, primarily benefiting the wrong sectors, will likely exacerbate the economic downturn when it arrives.
The Federal Reserve's (Fed) decision to lower interest rates at the end of the expansion cycle, during what was perceived as the final boomlet of the aging expansion, prolonged the period of economic growth. However, this strategy will likely deepen the recession once it inevitably arrives, as the postponement of depression delayed the necessary correction.
Indicators of an Upcoming Recession
The genuine economy, excluding the stock market, is likely to experience several challenging years ahead. Indicators include increasing debt levels and lower interest rates, coupled with uncontrolled spending. People are engaging in spending supported by constantly increasing debt. This unsustainable situation will soon come to a head, with the bursting of the debt-driven bubble, as people realize their finances are unsustainable.
Furthermore, international investors might stop funding our debt when they see no other countries are willing to do so. The influx of money into 401Ks is also expected to dry up, as pensioners will need to withdraw more to finance their lifestyle.
The Political Angle
The timing of the next recession can also be unpredictable based on political developments. If the Socialists take over the three branches of government, an economic recession will likely begin, followed by a halt in investment and employment prospects. This could occur as early as October 2020, or once the 2020 elections are over and it's clear that the Socialists will be in control.
The influence of political figures on the economy can be seen in historical data. Following the 2016 presidency transition to Trump and the Republicans, the economy experienced an unprecedented boom. Conversely, Marxist-driven politicians generally draw positive responses from investors, which could indicate an economic downturn if such politicians take power.
In conclusion, while the exact timing of the next financial recession is uncertain, current economic signals and political factors can provide insights into its possible arrival. It is crucial for both policymakers and the public to remain vigilant and prepared for potential economic challenges.