The history of economics, both, worldwide, as well as in this country, is we generally experience periodic occurrences, such as strong periods, recessions, and a variety of situations, in – between, The last prolonged recession, within the United States, began waning, during the first year of President Obama’s administration, in 2009. In recent history, this is one of the longest prolonged periods, without this economic down – turn, yet, for many, the uncomfortable part, is, not knowing, when to expect this change! Although, President Donald Trump, has overseen a good economy, during his entire administration, he appears to want the credit, for all the previous, positive aspects, while continuing to blame, and complain about his predecessors! This President appears to focus, constantly, on the politics of the office, while refusing to take any responsibility, for any less – than – desirable aspects! Politically, his strongest issue/ asset, is the performance of the economy, which has not only remained stronger, but, in many ways, strengthened, during the past 30 months! He seems to realize, any economic downturn, such as a recession, might harm his reelection possibilities, so he lashes out, at others, including, the Federal Reserve, the Democrats, etc. However, although, no one has a crystal ball, and a viable ability to see the future, a recent study indicates, about three – quarters of the economists, predict a recession, either in 2020, or 2021. Obviously, Mr. Trump hopes to delay it, beyond the Presidential elections. For several reasons, it appears likely, a U.S. recession, will occur, sooner, rather than later, and this article will attempt to, briefly, consider, examine, review, and discuss, 6 reasons, to believe it will.
1. 10+ years since the last one: While no one wants one, we haven’t experienced a recession, in over 10 years. Therefore, the nature of economic cycles, indicates, it is likely, to occur, in the somewhat near future. Many believe, several of the steps taken by Trump, were akin to putting a band – aid on a wound, addressing only present appearances, rather than fully considering future ramifications!
2. Huge Federal Deficits: For a variety of reasons, but to a large degree, because of the tax reform of 2017, as well as extensive expenditures, in the areas of foreign policies, the Southern Wall, and military spending, our national deficit, is near, record – levels! Extended periods of trillion dollar deficits, is, not only unhealthy, and irresponsible, but, weaken our overall economy, in the longer – term!
3. Tariffs and trade wars: The President’s reliance on imposing tariffs, if fully executed, will create an increase, in the costs of many items. A recent study indicates, if all the tariffs, suggested, take place, both, in September, and December, they will add an additional cost of about $1000, to the average family’s cost of living!
4. World economy: Regardless of what politicians, articulate, and/ or, desire, we live in a global society, and the world economy, has a significant impact, on the American one! Isolating ourselves, polarizing statements, or trade wars, will create far more harm, than good!
5. Extended low interest rates: While lowering interest rates, has been an effective tool, used by the Federal Reserve, to stimulate the economy, extending these, for a prolonged period, as we now have, has both positive, as well as negative impacts. The positive include: lower mortgage rates; cheaper – money for businesses, lower costs for loans, etc. However, the negative aspects, include: when they are already low, we lose a tool, for the future; they encourage more borrowing (which, over the longer – term, will have to be repaid, and, in the future, these rates might increase).
6. Consumer confidence: In order to avoid a severe recession, consumer confidence must be positive, and motivating/ inspiring! When Congress, often, seems, unable to function effectively, and the President articulates an inconsistent, often – contradictory, message, the public often, is confused!
Don’t bury your head, in the sand, but, recognize, a recession, is a reality of life, and must be prepared for! Are you willing to wake – up, and be ready for the future?