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Wed May 11, 2016, 11:52 AM

 

Recession May Loom for Next U.S. President No Matter Who That Is

Talk about a poisoned chalice. No matter who is elected to the White House in November, the next president will probably face a recession.

The 83-month-old expansion is already the fourth-longest in more than 150 years and starting to show some signs of aging as corporate profits peak and wage pressures build. It also remains vulnerable to a shock because growth has been so feeble, averaging just about 2 percent since the last downturn ended in June 2009.

"If the next president is not going to have a recession, it will be a U.S. record," said Gad Levanon, chief economist for North America at the Conference Board in New York. "The longest expansion we ever had was 10 years," beginning in 1991.



The history of cyclical fluctuations suggests that the "odds are significantly better than 50-50 that we will have a recession within the next three years," according to former Treasury Secretary Lawrence Summers.

Michael Feroli, chief U.S. economist for JPMorgan Chase & Co. in New York, puts the probability of a downturn during that time frame at about two in three.

more...

http://www.bloomberg.com/politics/articles/2016-05-11/congrats-on-winning-the-white-house-here-s-your-recession

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Reply Recession May Loom for Next U.S. President No Matter Who That Is (Original post)
Purveyor May 2016 OP
Peacetrain May 2016 #1
Fresh_Start May 2016 #2
pnwmom May 2016 #13
Albertoo May 2016 #3
Purveyor May 2016 #4
Albertoo May 2016 #7
PETRUS May 2016 #9
Albertoo May 2016 #10
PETRUS May 2016 #11
Albertoo May 2016 #12
PETRUS May 2016 #14
Albertoo May 2016 #15
just4lulzidk May 2016 #5
Thirties Child May 2016 #6
Wounded Bear May 2016 #8

Response to Purveyor (Original post)

Wed May 11, 2016, 11:54 AM

1. Makes sense...

Everything has a life span.. and back and forth.. and we are definitely over due

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Response to Purveyor (Original post)

Wed May 11, 2016, 11:57 AM

2. I've been thinking about that a lot

its not only our economy...but also that the global economy hasn't been contributing.

I wonder if the smartest thing to do would be to allow Trump to win...survive 4 miserable years...
but know that his voters will become even more disengaged or enraged with the GOP who once again let them down.

I hate the idea of any democrat being in office when we fall of the cliff again...

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Response to Fresh_Start (Reply #2)

Thu May 12, 2016, 02:50 AM

13. The next President could be appointing 3 or more Supreme Court Justices,

and their impact could be felt for decades.

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Response to Purveyor (Original post)

Wed May 11, 2016, 12:02 PM

3. it's worse than that

 

because 2007-2008 was a massive hit (the Great Recession)
The stormy waters have been calmed for a while by pouring oil (tons of free money)
But the storm is smoldering under the oil, and the free money supply is drying out..

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Response to Albertoo (Reply #3)

Wed May 11, 2016, 12:04 PM

4. That is the problem, the Fed can't prime the pump by lowering interest rates as they are damned near

 

zero now.

No, a recession of the magnitude of the 2008 recession (it started around 2007 for us in Michigan) will be devastating.

The time is now to start planning accordingly if one hasn't already.

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Response to Purveyor (Reply #4)

Wed May 11, 2016, 12:08 PM

7. Oh, it won't be 'another' 2008, it's the same

 

Like I said, all the free money pumped by the Fed and Draghi have bought time, but the downward cycle was kindled with no real fix.

On a gloomier note, what fixed 1929 was not really Keynes but WWII.
Seeing the rise in nationalism everywhere, I hate the comparison, but..

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Response to Albertoo (Reply #7)

Wed May 11, 2016, 12:42 PM

9. Re 1929:

Keynes/WWII... one and the same. WWII made expansive fiscal policy acceptable (or imperative, even). There's nothing special about wartime spending except that our elected representatives aren't so reluctant with the purse strings.

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Response to PETRUS (Reply #9)

Wed May 11, 2016, 09:36 PM

10. Keynes/WWII... one and the same is apparently not what the new studies say

 

I must confess to not having read into it, but the new consensus of economic historians seems to be that the New Deal wasn't working (yet?) when war broke. It seems the latest number crunching shows the uptick started with the war. Correlation or causation is more difficult to decide.

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Response to Albertoo (Reply #10)

Wed May 11, 2016, 10:27 PM

11. What new studies?

The data is plain. Look at federal spending by year from 1930 to 1946 and it's perfectly plain what happened. Outlays went from a few percent of GDP to 10% in 1934 and stayed around 8-10% for a few years with deficits in the order of 4 or 5% of GDP (this is the New Deal in action), then outlays started going up in 1941 and peaked at 42% of GDP with deficits of 20% to almost 40% of GDP (this is WWII). WWII was the proximate cause for the increase in spending but the results were because of the spending, not the war.

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Response to PETRUS (Reply #11)

Wed May 11, 2016, 10:50 PM

12. I got it from a 'cloud'

 

I read a fair bit of economic papers from a rather wide spectrum of sources, and I notice in the new century increasingly frequent remarks "in passing" about studies that put in doubt the fact the New Deal solved the economic downturn (it's possible nothing could have)

However, this does not mean Keynes and Roosevelt were wrong: the crisis was so terrible it was essential to put people back to work and regain livelihoods. All I believe these studies say is that the New Deal cured the symptoms, but that it did not -and that any policy could not- cure a downturn which had been caused by massive prior mistakes (and the cyclical nature of the economy as we know it)

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Response to Albertoo (Reply #12)

Thu May 12, 2016, 08:21 PM

14. I too read a fair bit of economics.

This study sounds like bunk. (Of course, economic theory predicts a well-funded market for right wing claptrap.) The public spending related to WWII (way higher than the New Deal) produced an economic boom. If the government had decided on something closer to that kind of spending for the New Deal, with ample financial support for basic research and industrial mobilization, we would have had an economic boom sooner. That kind of stimulus won't work if the resources (labor, skills, raw materials) aren't available, but clearly they were.

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Response to PETRUS (Reply #14)

Thu May 12, 2016, 08:29 PM

15. Well, you don't have to trust me, but..

 

..I am fairly good at picking 'clouds' and 'beams'

it's quite a bit of references I picked to a newly forming consensus on the New Deal

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Response to Purveyor (Original post)

Wed May 11, 2016, 12:05 PM

5. no surprise here. the market's cyclical, and after the records highs, a pull back is def possible

 

and if that's the case, i just hope y'all aren't some of those folks out there who couldn't afford a few hundred dollars if an emergency ever struck

personally, if there's another recession, i'll be buying buying buying into the market

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Response to Purveyor (Original post)

Wed May 11, 2016, 12:08 PM

6. Big recession and aggressive congress

Fwiw -- and it won't be worth anything to most of you -- I looked at an astrological chart for the inauguration. Whoever is elected is going to have to deal with an aggressive, ready-to-fight congress and major money problems. One may precipitate the other -- congress causing a major recession/depression.

Let the flames begin.

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Response to Purveyor (Original post)

Wed May 11, 2016, 12:18 PM

8. We do tend to over-emphasize what the Pres can do about the economy...

much of the 'slowness' of the recovery was due to Repub intransigence. I'm starting to think they want to lose this cycle so they'll have another Dem to blame the coming troubles on.

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