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For a country like the United States, recessions are at least somewhat like Tinker Bell. It's hard for external factors to seriously impact the US economy, as e

For a country like the United States, recessions are at least somewhat like Tinker Bell. It's hard for external factors to seriously impact the US economy, as evidenced by the fact that growth is seriously slowing in China and several major EU nations are either in recession or very close to it, and the US economy is still growing. The major factors that influence the US economy are largely people's willingness to borrow, lend, and spend. If you can convince a large enough share of people that a recession is imminent it will actually happen as they pull their assets back from risky growth-fueling investments into low-risk low-growth investments. This will limit growth opportunities in the economy. If this gets bad enough it can impact the function of certain types of existing businesses that depend on capital markets for liquidity, and the economy can actually begin to contract.

grey-area 7y ago
For a country like the United States, recessions are at least somewhat like Tinker Bell. It's hard for external factors to seriously impact the US economy Multiple trade wars precipitated by the current president certainly impact the US economy (and the global one). The coming global downturn will be almost entirely self-inflicted, but it won't be down to gossip about a possible recession, it'll be down to massive trade barriers imposed by fiat. Trade wars are bad and hard to win.
- ericd 7y ago
  We’ve been stacking tinder for a very long time with our monetary policy, as well as shifting demographics. The trade war might be the spark, but a spark on a clean forest floor doesn’t do much.
- dodobirdlord 7y ago
  "It's hard" and "it's impossible" are very different beasts, and I said the former and not the latter. I think that the fact that the US economy is still growing despite disastrous trade policy and oncoming global downturn illustrates my point. Years of national and global scale economic mismanagement haven't yet managed to drive the US economy into recession. (Also, the Fed is pretty good at its job.) In comparison, during the financial crisis, issues with a particular asset class in the US economy within months causes a worldwide recession due to increased assessment of credit risk and corresponding tightening of lending that had to be mitigated with massive bailouts to prevent a death spiral. As a further example, during the financial crisis many banks in perfectly healthy condition were forced to take bailouts so as not to inflame the perception that certain banks could not be trusted.

grey-area 7y ago

For a country like the United States, recessions are at least somewhat like Tinker Bell. It's hard for external factors to seriously impact the US economy Multiple trade wars precipitated by the current president certainly impact the US economy (and the global one). The coming global downturn will be almost entirely self-inflicted, but it won't be down to gossip about a possible recession, it'll be down to massive trade barriers imposed by fiat. Trade wars are bad and hard to win.

ericd 7y ago
We’ve been stacking tinder for a very long time with our monetary policy, as well as shifting demographics. The trade war might be the spark, but a spark on a clean forest floor doesn’t do much.
dodobirdlord 7y ago
"It's hard" and "it's impossible" are very different beasts, and I said the former and not the latter. I think that the fact that the US economy is still growing despite disastrous trade policy and oncoming global downturn illustrates my point. Years of national and global scale economic mismanagement haven't yet managed to drive the US economy into recession. (Also, the Fed is pretty good at its job.) In comparison, during the financial crisis, issues with a particular asset class in the US economy within months causes a worldwide recession due to increased assessment of credit risk and corresponding tightening of lending that had to be mitigated with massive bailouts to prevent a death spiral. As a further example, during the financial crisis many banks in perfectly healthy condition were forced to take bailouts so as not to inflame the perception that certain banks could not be trusted.