Is A Recession Inevitable?

Is A Recession Inevitable?

If I had to pick up a date
for the next recession, it would be sometime in 2020. So you can certainly make the case
that there’s a lot of areas where things look a bit unsettled. The fact of the matter is people
are looking and saying, I don’t feel like it’s any easier to pay my bills
this year than it was last year. The so-called Great Recession ended
more than 10 years ago. Since then, the United States has
been in its longest economic expansion in history. But good
times don’t last forever. We’re basically in an industrial
recession, a global one. And it does remind me to 2016 to
even ’98 where the US was OK, the rest of the world was not. Understanding how the economy tends to
evolve, we would put the number around maybe 25 to 30 percent
chance of a recession over, say, the next four-quarter horizon. We have to recognize there’s a
difference between a slowdown and recession. We’re still not
in a recession camp. Short run economic forecasting is
a is a black art. Nobody does it very well. For what it’s worth, people who are tracking are
feeling moderately depressed right now. They’re seeing slow
growth right now. And the markets, the bond market is
acting as if there’s a pretty good chance of a recession sometime
in the next year or so. But who knows? There are all kinds of things
that could be going wrong. China is clearly struggling. Europe may very well actually
already be in recession. We probably are suffering the
deflation of the tech bubble. Corporate debt has gotten, it, I’ve
been saying there’s no one thing this is if we’re going to have
a recession, it’s going gonna be a smorgasbord recessions, it’s going to be
no one thing, but just a bunch of different things. Why
all the doom and gloom? Mainly, it’s because the bond
market recently flashed warning signs that a recession could
be on the horizon. Other economic indicators,
like U.S. manufacturing activity, were also
lower than analysts expected. So when could a recession hit? And how will we know? It’s been now quite some time since
the 2008 recession, so the US economy has been growing for 10, 11
years is a very long expansion. We’ve seen recently, if you just look
at the popular press, a bubble, I would say in
discussion about recessions. Everyone wants to talk about it. Is
there one just around the corner? The fact that the expansion has
lasted so long has no predictive power whatsoever for whether a
recession will start tomorrow. If I had to pick a date for
the next recession it would be sometime in 2020. We’re in
a self-reinforcing, virtuous cycle. Lots of jobs, low unemployment,
wage growth is accelerating, that’s supporting more consumer spending, which
is causing businesses to hire, which is
pushing unemployment down. So we’re in a very virtuous cycle. That’s pretty hard to break,
but it can get broken. And in my view, that
probably would occur in 2020. So the policies, the economic
policies that the administration is pursuing is doing damage
to the economy. And that’s going to become increasingly
more obvious as we move through 2019 and 2020. And that’s why I think 2020 is the
day of reckoning — if there is a day of reckoning, that’s when the
economic expansion will end and a recession will ensue. So
let’s define a recession. The official designation of a recession
comes from a place called the National Bureau of
Economic Research. It defines a recession as the period
between a peak and a trough of economic activity. The organization doesn’t
give a set definition of economic activity, but looks to
indicators like domestic production, employment and retail sales. We do have business cycles. God hasn’t conquered
the business cycle. President Trump hasn’t conquered
the business cycle. And it’s hard for the Fed to
conquer a business cycle, but they can at least try to smooth it
out as they go through time. There are some other things outside of
the country that could come to infect us. I’m especially
worried about Europe. I think the European Central Bank
has conducted a policy that has hidden some really bad credits, not
just in Italy, but elsewhere. If I come to you and say I’m going
to lend you money and by the way, I’m going to pay you to take
it, you’re going to make mistakes. You’re going to stretch out on your
risk spectrum and you’re going to make some bad decisions.
That’s human nature. It’s not quantifiable. It’s just human nature. Another
commonly accepted definition of a recession is two consecutive quarters or
six months of negative GDP growth. But not everyone agrees
that’s the best measure. And it’s not the official
marker of a recession. There are many good reasons to care
about GDP, but there’s a lot of other things that real human beings,
not just economists, also care about. The first is
think about inequality. GDP tells us how big the
size of the pie is. It doesn’t tell us whether
people are getting fair slices. So we should care about the distribution
of income, not just how much of it there is. GDP only tells
us how much of it there is. GDP tells us about the value of
all goods and services bought and sold in markets. But a lot of really important
stuff doesn’t happen in markets. We could double GDP tomorrow,
it wouldn’t be that hard. What we do is we’d force everyone
to stay at work twice as long. Force everyone to work twice as
many hours, we’ll probably get roughly, maybe a little bit less,
but nearly twice as much stuff. GDP would nearly double, but I
reckon people would be miserable. The Bureau doesn’t give a
time requirement in its definition. Instead, it says a recession can last
from a few months to more than a year. In 2018 we
had nearly 3 percent growth. That’s not sustainable, nor is it
normal for this business cycle. A normal pace of growth for this
business cycle is a low 2 percent handle. And that’s what we think
we’re going to see this year. But a growth moderation does
not necessarily equal a growth contraction or a recession. And what’s worse than a recession? A depressio. That’s defined as severe economic
decline the lasts several years. All this means we can only confirm
we’re in a recession once it’s already started. The challenge with
identifying risk is that it’s very hard to know in real time which
factor is going to end up being what shocks the economy. So we can attempt to look at
the potential areas of concern, and China would be certainly
one of them. And it’s not just China, it’s how
that spills over to Europe, the data in Europe has weakened so
there’s lots of connection there as well. So you could certainly make the
case that there’s a lot of areas where things look
a bit unsettled. In the 2008 recession, economic output
hit a peak in December 2007. But the contraction wasn’t formally
announced until December 2008. In July 2019, the U.S. officially entered its longest
expansion in history. That month marked the 121st month
of economic growth following the Great Recession. Well you know, we
have, we’re having the longest economic expansion since the Civil
War 1991 to March 2001. My period there, we had monetary policy
all by itself but now you have a big boost from fiscal policy
and also a new regulatory regime that came in with, which is
more pro-business, that came in with President Trump and also
with the Republican Senate. So I would expect this to be
prolonged perhaps all the way through next year. We’ll see. While this boom has been the longest,
it’s also been the weakest in several areas. GDP growth and job
growth have been lower than in previous booms. The absence of
faster wage growth, despite low unemployment is something
of a mystery. But, you know, the
economy is always changing. The way we measured the unemployment
rate is always the same. But what it means in terms of
how are tight labor markets, how much bargaining power workers have. That can change a lot depending on
what the economy is like and it looks as if we have an economy
right now where between weakness of unions, concentration of market power
among employers and maybe other factors, we just don’t understand
what looks like this historically low unemployment rate isn’t actually
translating into the kind of bargaining power that workers
used to have. Manufacturing is not going to come back
to the United States to the we’re not going to recreate the
golden era of capitalism, the 1950s or 60s. Even if China didn’t
export as much manufactured goods to us, we’re not going to make
mostly apparel in the United States. We’re gonna be importing it
from Vietnam or from Bangladesh. To the extent that manufacturing goes
back to United States, a process which is called onshoring,
is going to be robots. It’s not going to be jobs in
the Midwest, jobs in South Carolina. So in the end, for all
the rhetoric, Trump is not delivering. And for the foreseeable future our biggest problem is going to
be a lack of labor, right? The baby boom generation, my
generation, is retiring en masse. Every single year for the next 15
to 20 years the labor force participation rate is going to fall
by a quarter point per annum because we are retiring. You know, the global slowdown
is a real thing. It’s just that, for
right now, the U.S. continues to look pretty
strong to me. And so, you know, there
things could always happen. But I’m not looking for a
slowdown in the US anytime soon. People don’t live on GDP. People live on their paychecks. And paychecks have not at
best kept slightly ahead of inflation. Whatever people may say about
the growth number, the fact of the matter is people are looking
and saying I don’t feel like it’s any easier to pay my bills this
year than it was last year. Is a recession on the horizon? Most likely we won’t know
until it’s already started.

100 thoughts on “Is A Recession Inevitable?

  1. 2007 – Present: Recession continues, wages are not livable, homelessness rising, companies are greedy pure evil hoarders!!!!!

  2. Fatal flaw for the economy is too much debt, high REAL inflation, not enough wage growth. Too much debt means the average person , ir corporation for that matter, can take little or no more cheap money out. With wage growth and inflation where it is people have less, not more spending power and therefore have less disposable income. Home prices have gone up 30% the last 5 years which nullifies any benefit from rate cuts or wage growth. Everyone keeps hearing how great they economy yet everyone is finding it harder and harder to make ends meet….why is that? All the wealth grown in the economy have gone to the top 10% of people that have tripled their money in the stock market the last 10 years. The rest and especially the bottom 30% is much worse of now than they were 5 years ago.

  3. If only there was a smart presidential candidate that echoes the concerns of these Nobel prize winning economists and proposes innovative solutions. Oh yeah there is, Andrew Yang. Weird how NBC didn't get his perspective on this issue, it's almost like they have an agenda to not give him any media attention.

  4. Obama rescued America from a horrible recession made by a Republican President and now evil, crazy, liar Trump, a Republican, is ruining us once again. When are we going to learn that Republican ideas of economic are wrong and will cause us pain?

  5. If the news is talking about it then it must happen right!!! Oh wait its already happening, I'm struggling to pay my Bill's. SO yeah let's have a recession that will help me pay my bills even more. No let's increase wages but increase food prices first . Let's increase rent and increase taxes . Only way to end this corruption is a big ole meteorite the size of the planet.

  6. Will the American Sneeze spread the infection to other parts of the world. Which country has low immunity and prone to disease

  7. Given the state of the US economy, the main cause for a recession would be the trade war. Hopefully the Americans will not reelect the fool at the next elections

  8. Good time people working 2 jobs to live ok…. high hours good times….High Homelessness Good times …..lack of affordable Homes good times smh Expanding for who??? DON'T Forget World market the west fought so hard to connect for control purposes is slow down smh

  9. Don't Forget There is a Gas crisis in the Americas because of embargos on the affordable gas In Which many Caribean nations and Latino Nations bought from Venezuela have created many issues

  10. I see a lot of talk about an imminent recession all over financial news. Makes me think there's definately not a recission or a crash incoming. Recessions and crashes tend to happen out of the blue.

  11. Recessions is a fake manufactured economic problem created by Jews.
    Get rid of them? And problem solved!!
    They teach nations about taxes, and how to extract money into the hands of the few..
    But OF COURSE you will witness a recession.. <:^)0-
    How did I know?? <:^)
    History.. :o)

  12. Last time a recession happened they gave billions to the banks and auto industry. But what about the people? Give the people UBI, andrew yangs Freedom Dividend 1k a month would bail americans out. It helps with these issues

  13. Longest economic expansion but who here actually felt it?
    Stocks did well.
    The rich are great.
    Cooperation at record highs.
    Normal people still struggling, not seeing a penny of it, wages still stagnant.
    And look at that it's about time to pay for all those tax breaks for those corporations and rich people.
    Yay the cycle to end game capitalism continues.

  14. Time Capsule For people in 2024-2030: (Today is 10/11/2019) The price of one Bitcoin is $8365. The price of one Ethereum is $184. The price of one Bitcoin Cash is $220. The price of one Lightcoin is $57. The price of one EOS is $3. The price of one Stellar is $0.06. The price of one Monero $57. The price of one Dash is $73.
    The price of one Maker is $512. The price of one Huobi Token $3. The price of one Tron is $0.016. The price of one Cardano $0.04. The price of one Zcash is $37. The price of one Neo is $7. The price of one Decred is $17. The price of one MCO is $3.

  15. First they call it a ten year recovery from 2008 crisis, now they call it expansion. How easy it is to manipulate people’s opinion. Fu…Ing mass media!

  16. I was just watching a video on Nicole Scherzinger’s LA mansion and realized this video was probably way more relevant to my situation.

  17. during recessions there is still earth, water, seed and sun yet people were starved to death. Recessions are a tool for the extremely powerful and wealthy to regain all the wealth.

  18. Dual Income >HigherIncome >Businesses charge higher prices> Fewer Jobs (Both Genders and Illegal Aliens working).

  19. 1920s: Wealth gains: Stonks. Music: Jazz.
    2020s: Wealth gains: Cryptos. Music: Nu-Jazz, Swing-Hop, Swing-Step, Electro-Swing, Future-Jazz, Progressive-Swing, Tropical-Swing, Electro-Big Band.

  20. “God hasn’t conquered the business cycle” is something a rich person says after they’ve screwed over a lot of poor people.

  21. Automation. GDP's faultiness. The next industrial revolution. These are things Andrew Yang is running his campaign on and probably the only one taking realistic approach on helping solve them.

  22. We are at a time in history, when everything might change. The fake propping up of these markets and banks does not look good. Add in displacement of jobs to tech and an aging population. I think a depression is coming.

  23. Developed countries will be developing country as income gap widening and more people are unhappy.
    North american pattern:
    Shelters used to be 25% of minimum income, now become 40-50%. Biggest catalyst is property hoarders, put a cap on speculators.
    Residents either uneducated or extremely in debt with student loan.
    Easy jobs are replaced with robots.
    Consumer behaviour are changing toward online and offline retail business became risky as traffic fading.

    The rise of South East Asian, Thailand, Indonesia, Vietnam, Philippine, Malaysia. More people pursuing higher education.

  24. Professor, without knowing precisely what the danger is, would you say it's time for our viewers to crack each other's heads open and feast on the goo inside?
    Yes I would, Kent.

  25. The lesson to be learned is we have to get financially educated and learn how to use debt and turn it into Real Estate asset. There is nothing that will stop recession from happening, believe me this time it will be WAY worse than 2008. The fed hasn't change their policies since 1972, they've been printing money ever since. Buy Gold, Silver soon. These guys were saying the same thing pre-2008 and its NO different.

  26. A recession is when the government either engineers the recession or otherwise plays dumb to the impending signs of recession. Like 2008, the national wealth is then transferred from the middle to the top. The banks, hedge funds, investment houses, foreigners, speculatora buy up the wreckage, then it starts all over again. It's a way of culling the herd. If you think homelessness is bad today wait until this next recession is allowed to take hold.

  27. I don't know what these people are trying to prove but it doesn't need to be a rocket scientist to figure it out since it is cyclical. Eventually will have a recession. The problem is these economists or voodoo economists or whoever they are keep on predicting every month which eventually become more of a Nostrodamos predictions.

  28. theres is no rule that states there has to be a recession. it could go on forever, or 20 years or 50. history shows that factors often cause it to happen 4-10 years, but it does not mean that is a hard and fast rule

  29. USA media is really really good at manipulating social emotions on economy, creating chaos. But USA cannot easily buy foreign country’s good asset in very low price, because china and other country with large amount of USA dollars could buy in a higher price. It will not work, finally USA will pay for its own debt,which is huge and will rip USA to pieces, we will see.

  30. The fact that countries and companies are booming and growing so insanely fast and sustainably for over a decade, while wages are barely keeping up with the price increases of basic household goods like milk, butter, and bread is terrible. House prices are rocketing up beyond the reach of the middle class. This is because many companies have become so powerful that they can dictate the labour market and drive down costs (your wages!!). Gigantic corporations need to be broken up or regulated more, or a forcibly higher minimum wage needs to be set to save the common man..

    Edit: Much of the growth is built on shaky foundations: 1) cheap oil being found in USA/Canada, 2) OPEC oversupplying oil, 3) companies being able to push wages low (immigrants/political lobbying), 4) overly-generous gov/bank lending (credit card debt/car debt/student debt), 5) china subsidising multiple high-tech industries (solar panels, lithium mines, battery-electric & hydrogen cars).

    1 – the profits from this are being spent poorly
    2 – this could change overnight if the group decides to
    3 – depends on young people actually voting if this changes
    4 – this is stopping abruptly
    5 – this is stopping abruptly

  31. Debt super high and home prices have peaked and have been falling. Time to crash the market so that rich people can make money again and poor people foot the bill. Some kind of fabricated crisis so that they can be bailed out

  32. The Bubble is Home Shopping. Spending is high because people are addicted to the convenience of a hermit lifestyle. That comes at a cost that has yet to be paid.

  33. 2:14 you can put the Australian in the middle Northern part of the United States but you can't take the Northern part of the United States accents into the Australian.

    Michichigan/Candians/North Dakotaians: Sorry eh.
    This guys: GOOOD DAAAAYEEHH.

  34. 0:27 Remember when republicans called it 'the slowest economic recovery in history' because it started under Obama? Now they take credit for obama's economy, which they inherited, as if we are booming, its fkn ridiculous. Now CnBC is calling it the 'longest expansion'. smh

  35. Market prediction a “black art” is right on the money.
    Keep printing the money.
    Bailouts, this time around, will be interesting to witness.

  36. Isn’t this a recycled video…

    Once again
    1. You don’t double GDP just by working double hours.
    2. The expansion hasn’t been going on for 11 years. I mean, it’s not like the recession was a one day event.

  37. 2:45 Wage growth is accelerating that's delusional. Nothing has changed all we have is more low-wage jobs with no benefits and do no future and these kind of people are in charge of your life your future crazy, it's your life it should be in your hands. The problem is we don't create wealth we borrow it that's how the system is designed, it is rigged to keep you in debt. Most individuals will not be able to get enough money shift in their direction to pay off their debt and if they do the debt is still there.  The evidence is here  73 trillion dollars  in-counting of debt and that's not including the interest we can't even begin to pay down the principal or the interest.  Humans are in dire need of a new modern monetary system where debt does not exist because the fact is, debt is cancer it is a silent killer. I am baffled that most financial experts have not come to the conclusion that the system must be reinvented redesigned modernised, we are literally running on fumes, borrowed money, borrowed time bottom line that money has to be paid back at some point if we continue to believe and have faith in in the current monetary system. How do you expect one to pay back what they didn't have in the first place the individual human has no value, your worth is determined by what someone is willing to give you, and not what you do

  38. Tell these greedy ass companies to free up some of this money they stock pile that might help … Better pay equals a better economy …

  39. Leave it to CNBC to be pessimistic about a great economy and blame a recession on trump that hasn't even happened. Lol

  40. Even if 100% of every sold in the US was "manufacture" in the US that would not translate to the percentage of manufacturing jobs we had in the 1970s. The US makes more goods than ever before. It just does it with a much smaller work force. Facts are it just doesn't take as many people to make stuff any more. GM, Ford, Kia, BMW, VW, Chrysler, Dodge, Ram Hyundai, all assemble the majority of their cars in the US however as a percentage of jobs, less people work in the auto industry. Why? Automation! We make more stuff with less people.

  41. Avoid a recession by voting for Andrew Yang
    Please invest a little time in learning about Andrew Yang and the policies his campaign is presenting.
    #HumanityFirst #Yang2020

  42. The people of america are already past recession. Low tier jobs are cancer right now because they're filled with middle aged individuals who have already given up.

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