What do you guys think the catalyst will be for the next recession?
Pretty straightforward question, so what do you guys think will be the catalyst(s) for the next recession?
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I'm beginning to be convinced subprime auto loans may be a precursor to the next downward trend but perhaps not serious enough to be the cause of a recession.
www.bloomberg.com/news/articles/2017-03-10/u-s-subprime-auto-loan-losse…
I think we are still in one.
Keeping people out of the labor force for 4 years and saddling them up with $40k debt is a great way to slow down the economy and productivity.
Big banks can train you for the job in 3 damn weeks.
Funny answer? Doesn't matter. We'll blame Donald Trump.
My answer? The most likely catalyst is a fixed income crash in the Eurozone.
beanie babies 2.0
Can't believe no one has mentioned this yet - the student loan bubble
Student loans are essentially backed by the government, hence one regulatory reason for persisting through personal bankruptcy. In essence they have a bailout built in to them because even private loans for education are regulated like federal loans.
Additionally the value of the underlying assets is largely intangible (an educated workforce) so in the event of a large series of defaults valuing which accounts will contribute to some contagion effect is tremendously difficult. Student loans don't increase in value due to speculative demand the way tangible assets like homes can. The contagion effect will be minimized to very narrow issues of personal credit, yes a problem, but no not a bubble.
Student loans are worrying if you want to discuss income inequality or real wages and their effect on economic policy but they are less worrying in context of an actual recession. The name bubble is actually misplaced here.
This is the main set of reasons there is no student loan bubble, it is contrary to core economic principles of how bubbles form and what causes them to burst. Student debt absolutely is a problem but it isn't this kind of problem.
Self-imposed 20% border tax is the most likely catalyst given that top advisors aren't backing down regardless of economists estimates. The Trump administration is one that has nearly the fewest economists on staff in American history. I would look for a catalyst related to economic policy as a likely culprit.
Commercial Property Bust. We're seeing the initial onset with the big retailers like JCP and Sears selling off.
lots of things to be worried about IMO...
subprime auto and student loans too small on their own to cause a crisis but each are very real problems (and both are securitized and sold to investors) especially with used car values tanking and student loan defaults rising (at least for borrowers who have already missed payments).
ETFs have become the tail that wags the dog for a lot of fixed income products which is concerning since it is too difficult to buy/sell a lot of cash bonds without moving the price too much (could see more flash crashes/rallies).
brick and mortar retail continuing to go bust (sears, jc penney, macys, etc.)
peer to peer lending. this was a bad idea from the beginning and i think all the issuers had their default/credit models wrong. i dont have many peers i would personally lend money to, especially if it were unsecured.
hardly any wage growth
US corporate debt (there is now more US corp debt outstanding than mortgages if you can believe that).
european banks are still zombies
possible trade wars with China
another EU country exiting
10%+ stock market selloff
fed raises rates too aggressively
Trump administration not getting things done (ie. Healthcare and Tax Reform, except i think Tax Reform will go through easily)
multifamily housing, there is currently an FHA backed glut of this stuff in nearly every city across the US
also, remember that central banks are buying roughly $200 Billion per month in securities between the Fed, ECB, BOE, BOJ and SNB, so what happens when they stop buying?
not sure any of these cause a recession, but a combo of a few certainly could...we are about due for one though