In June 2009, the recession caused by the financial crisis of 2008 was finally over. However, the country as a whole still has not fully recovered from this disastrous crisis and recession. In the seven years that have followed we have seen the markets fall to even lower lows due to near zero interest rates that were used to help curb the disaster of the crisis and recession. These new all-time highs have begun to falter, and it has increased the idea that another recession may be approaching in the coming years.
A recession is defined as a drop in Gross Domestic Product for two consecutive quarters. There is no telling exactly when the next recession will occur, but it has become apparent that it will be coming in the next few years. One of the major indicators that has led to this conclusion is the consumer confidence. It measures how much consumers are spending. If people think that a recession is imminent then they will often start to spend less and save more to hopefully avoid financial problems.
Another major contributor to this is the past hundred years. The U.S. has never seen 10 years of sustained growth. This does not mean that it has to lead to recession, but the odds are heavily stacked toward recession.
Currently Wall Street economist believe that there is a 60 percent chance of a recession in the next four years. This leads to an important point that should be stressed due to the election. This recession is not due to any political party or figure. In most cases the economy just starts to stall or the Federal Reserve makes a policy mistake that causes more harm than good. The most likely cause of a recession will be some kind of shock to the economy such as the housing collapse that caused the 2008 crisis. These are normally the cause of recession because they are incredibly hard to predict. Once an event like this has occurred it then becomes important to combat these events.
A big concern for the future is how will the Fed deal with a recession. In the past they have lowered interest rates to help consumers and businesses cope. However, the Fed cannot make rates any lower. In fact, there has been a large push for a raise in interest rates. This would most likely increase the timeline for a recession. The Fed projects they will raise rates by the end of the year.
Peter Zabiegala a sophomore international business and economics double major weighed in, “It’s going to occur in the future but it is still a concern because it is an inevitable event. Even before economists started saying that it was coming it should have been expected.”
There is no saying when the next recession will occur or how badly it will harm the economy, but it will eventually come. In the end the Starks are always right “WINTER IS COMING.”