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WSJ: Economists Believe Recession to Hit America Within Next 4 Years

WSJ: Economists Believe Recession to Hit America Within Next 4 Years

By    |   Thursday, 13 October 2016 04:50 PM

 

The Wall Street Journal’s latest monthly survey of economists put the odds of a recession striking the United States within the next four years at nearly 60 percent.

“That is not an assessment that the next U.S. president will cause a downturn,” the Journal explained. 

“Rather, it is a recognition that throughout its history the American economy has never grown for more than a decade without a recession. Over the course of the next four years, something—whether exhaustion of the economy’s cyclical momentum, a policy mistake from the Federal Reserve or some outside shock—could knock the economy off course,” the Journal reported.

The current expansion started in June 2009, and has continued for 88 months, making it the fourth-longest period of growth in records stretching to 1854, WSJ.com reported.

“Economists see a 20 percent chance of a recession within the next year, and see those odds rising as the window gets longer. Asked to name the specific risks, a plurality cited the possibility of a global economic slowdown, which could be largely beyond the next president’s control,” the Journal reported.

“We do not think expansions die of ‘old age’ but there’s more probability that a shock will hit the U.S. economy further out in the horizon,” Lewis Alexander, chief U.S. economist at investment bank Nomura, told the Journal.

Other respected economic gurus have also warned that the nation could be headed into trouble very soon.

September’s jobs report contained a sign that investors should be on alert for a U.S. recession, judging by bond guru Jeffrey Gundlach’s favorite warning signs, Bloomberg reported. During a panel discussion at the New York Historical Society back in May, the Doubleline Capital LP chief executive officer revealed that one of his top three recession indicators was when the unemployment rate breaches its 12-month moving average.

September’s non-farm payrolls report showed that the unemployment rate in the U.S. ticked up to 5 percent, while the 12-month moving average held steady at 4.9 percent. Over the past year, the trend in the unemployment rate has flipped from improving to deteriorating.

“This indicator is a necessary, but not sufficient, sign of a coming recession,” wrote Gundlach in an email to Bloomberg. “It is worth factoring into economic analysis but not a reason for sudden alarm.” 

Gundlach isn't alone in his warning.

Reagan Budget Director David Stockman predicts that the nation will plunge into a recession, even though Hillary Clinton will win the presidential election. While many analysts believe the stock market will rally in the wake of a Clinton victory, the author of "Trumped! A Nation on the Brink of Ruin" believes the economy is doomed regardless of the result.

The former director of the Office of Management and Budget predicts Congress will be "totally dysfunctional" once Clinton is in office. Lawmakers may not be able to come together and work out solutions leading to economic growth given how many divisions the election has caused, CNBC explained.

"I think it's going to be so contentious in the House because [Paul] Ryan has moved to protect his House majority, that it's very likely that investigations will begin immediately," the Newsmax Finance Insider told CNBC. "And within any kind of excuse, they will try to impeach Hillary Clinton barely after she gets in office," he said.

"When the stock market stumbles and the economy begins to actually register negative growth, which I think is coming if not next quarter certainly in the first half of next year, there's going to be nothing below and the market is going to go through a massive contraction," said Stockman. "I think it's going to be a very nasty time in the year ahead," he added. 

But not all gurus are as pessimistic as Cuban and Gundlach. 

Wells Capital Management's Jim Paulsen predicts that the stock market will literally end the year with a bang as it charges into 2017. "I think we're going to maybe find out we are finally turning northward on earnings momentum," Paulsen, Wells’ chief investment strategist, told CNBC. 

(Newsmax wire services contributed to this report).

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The Wall Street Journal's latest monthly survey of economists put the odds of a recession striking the United States within the next four years at nearly 60 percent.
recession, four years, economy, wall street journal
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2016-50-13
Thursday, 13 October 2016 04:50 PM
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