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>If you think a recession is coming, what will be the trigger(s)? Not in the immediate timeframe, but there are some potential breakers looming out there that
by bduerst 9y ago
>If you think a recession is coming, what will be the trigger(s)?
Not in the immediate timeframe, but there are some potential breakers looming out there that have potential to hit in the next year or three.
The first is inflation, and the fact that we just pulled a massive tax cut. This will probably lead to stock buybacks, throwing gasoline onto the already booming economy. Usually it's best to save the cuts for busts, to stimulate growth. Now it's like throwing that third fuel pack into the train engine on Back to the Future III.
The second is the education bubble. The wealth gap is slowly but steadily growing for the current generation, and student loans are a strong cause. This is more insidious because you're turning out a generation with decreased buying power that they won't recover from without intervention. Depending on the method of the intervention, it could lead to debt disappearing which will cause another recession.
Lastly is the housing bubble. It busted in some areas but is still booming in others, thanks to no financial reform to prevent it from happening again. This alone won't be a large enough factor to trigger another recession, but could when combined with another smaller cause, like inflation. The fed has moved up the interest rate increase schedule because it's becoming obvious that we're looking at signals pointing to increases in inflation.
- heurist 9y agoI recall hearing about a subprime auto loan bubble too.