The Coming Recession in America
We are in the longest stock bull market in history. One hundred and sixteen months later, since the recovery began in March of 2009, the United States economy has been on a tear. You could have invested into tech stocks, the DJIA or just about anything else for that matter and have done well. The real estate market has followed, with house gains far above the 2008 bubble in 2019. Despite all this l, a recession is coming, and the Federal Reserve Bank cannot save us this time.
The Federal Express CEO warned of slowing global growth this week, and indicators including the inverting yield curve may be signaling a downtrend. Our main problem is rampant borrowing on credit due to record low interest rates for over a decade. Even worse is that personal debt including credit cards is now at a record $4 trillion. If debt levels are this high in a bull market with economic prosperity, it will be catastropic as interest rates rise and layoffs occur.
The Federal Reserve Bank did not raise rates in March, and said they will not raise them again in 2019. This was a sign to the stock market that cheap money for stock buybacks will be plentiful. The problem is that the Fed uses rate reductions and purchases of assets to protect us from a recession. Wallstreet loves the news that cheap money for borrowing is available, but this leads to an unhealthy environment for Main Street.
Real Estate prices keep inflating. Cheap money means lower interest rates, higher prices, but the supply is the same as it was. Read more here:
https://amp-ft-com.cdn.ampproject.org/v/s/amp.ft.com/content/219aaa52-4675-11e9-b168-96a37d002cd3?amp_js_v=a2&_gsa=1&usqp=mq331AQCCAE%3D#referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fwww.ft.com%2Fcontent%2F219aaa52-4675-11e9-b168-96a37d002cd3
Our next recession is going to be based on credit saturation. We simply cannot borrow our way out of this issue. This weak recovery, aging boom cycle powered by debt and our record personal debt is going to throw us into a recession. What is your take?
Sources:
https://money.cnn.com/2018/08/22/investing/bull-market-longest-stocks/index.html